Bank of America has been ordered to pay $250 million in fines and restitution for a slew of violations that harmed consumers. The US Consumer Financial Protection Bureau said the bank had “double-dipped” on fees, withheld promised cash and points for credit card users and even opened accounts without consumers’ knowledge.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent. These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system,” said CFPB Director Rohit Chopra.
According to the US regulator the bank had repeatedly charging customers holding insufficient funds a $35 penalty for the same transaction and withheld cash and points for eligible consumers who had signed up for credit cards. Employees also illegally applied for and enrolled consumers in credit card accounts without the consumer’s knowledge. CFPB said that these actions were tied to “now disbanded sales-based incentive goals and evaluation criteria”.
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Bank of America will now have to pay $90 million in penalties to the CFPB, $60 million in fines to the Office of the Comptroller of the Currency and $100 million in customer restitution.
Meanwhile the company noted in an emailed statement to Bloomberg that it had “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022.” As a result of these changes, Bank of America saw a more than 90% drop in revenue from these fees. It declined to address the case or the allegations against the lender.
(With inputs from agencies)
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Updated: 12 Jul 2023, 01:15 AM IST