Bank of America has been ordered to pay $250 million in fines and customer compensation for engaging in deceptive practices that harmed hundreds of thousands of consumers, according to the Consumer Financial Protection Bureau (CFPB). The penalties include $90 million to the CFPB and $60 million to the Office of the Comptroller of the Currency. The bank must also pay $80.4 million in consumer redress on top of the $23 million it had already paid to customers who were denied rewards bonuses.
The deceptive practices identified by the CFPB include withholding credit card rewards, illegally double-dipping on fees, and opening accounts without customer consent. The bank's policy of charging customers $35 for non-sufficient funds fees, also known as overdraft fees, was especially problematic. The CFPB found that the bank allowed fees to be repeatedly charged for the same transaction, leading to significant additional revenue for the bank. Bank of America has since eliminated non-sufficient fund fees and reduced overdraft fees.
The CFPB also found that the bank withheld credit card rewards from tens of thousands of consumers who applied in person or over the phone instead of online. Additionally, the bank had employees who illegally applied for and enrolled consumers in credit card accounts without their knowledge, resulting in unjustified fees and negative impacts on consumers' credit profiles.
This is not the first time Bank of America has faced regulatory action. In 2014, the CFPB ordered the bank to pay $727 million in consumer relief for illegal credit card practices. Furthermore, in 2022, the bank was fined $225 million for botched state unemployment benefit disbursements and $10 million for unlawful garnishments.
The order against Bank of America comes less than a year after the CFPB issued its largest fine to date against Wells Fargo, totaling $2 billion in customer restitution and a $1.7 billion penalty. This settlement was reached following scandals tied to Wells Fargo's sales practices.
Overall, the penalties imposed on Bank of America highlight the need for strong consumer protection measures and regulatory oversight in the banking industry. It remains to be seen how the bank will address the concerns raised by the CFPB and rebuild consumer trust moving forward.