Bank of America (BoA) will have to pay $250 million for charging junk fees, withholding credit card awards, and opening accounts without customer consent, in one of the biggest fines it has faced in nearly a decade.
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Banking regulators said the second largest bank in the US harmed hundreds of thousands of people over the course of several years.
Under the $250 million fine, the bank has been ordered to pay $100 million to consumers harmed by its alleged practices. BoA will pay $90 million in penalties to the Consumer Financial Protection Bureau (CFPB), according to a statement released by the agency today (July 11). A separate $60 million will go to the Office of the Comptroller of the Currency (OCC).
BoA didn’t acknowledge the regulators’ findings in an email to Quartz.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” a bank spokesperson said in a statement.
The bank ran a “double-dipping scheme” where it charged customers a repeated $35 fee when a transaction was declined, allowing it to accumulate “substantial revenue.”
BoA also withheld promised cash points and rewards on credit cards to tens of thousands of customers, and didn’t give sign-up bonuses due to internal system failures.
The bank additionally used customer information, without authorization, to illegally open credit card accounts. Customers were charged fees, and their credit scores suffered as a result.
“These practices are illegal and undermine customer trust,” CFPB director Rohit Chopra said in a statement. “The CFPB will be putting an end to these practices across the banking system.”
BoA violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Federal Trade Commission Act, according to regulators.
April 2014: BoA was fined $727 million for illegally charging 1.9 million customers for credit card services they never actually received.
May 2022: BoA was fined $10 million for unlawfully freezing customers’ accounts and charging garnishment fees in violation of state laws.
July 2022: BoA was fined $225 million for “botching” the distribution of state unemployment benefits during the pandemic.