Bank of America ordered to pay over $100M for 'double-dipping on fees,' withholding credit card rewards
Bank of America serves 68M people and small business clients
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Federal regulators are ordering Bank of America to pay over $100 million to customers for illegally charging junk fees, withholding credit card rewards and opening fake accounts.
The Consumer Financial Protection Bureau (CFPB) said in a statement Tuesday that the bank was also ordered to pay an additional $90 million in penalties to the CFPB and $60 million in penalties to the Office of the Comptroller of the Currency.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BAC | BANK OF AMERICA CORP. | 47.04 | -0.47 | -0.99% |
The CFPB specifically accused the bank of harming "hundreds of thousands of consumers over a period of several years" for, in part, "systematically double-dipping on fees imposed on customers with insufficient funds in their account," which the Office of the Comptroller of the Currency said was illegal.
CFPB CRACKS DOWN ON OVERDRAFT, BOUNCED CHECK FEES
Historically, the bank would charge customers a $35 overdraft fee after the bank declined a transaction because there were insufficient funds in the account. However, the CFPB accused the bank of "allowing fees to be repeatedly charged for the same transaction." The agency said Bank of America "generated substantial additional revenue by illegally charging multiple $35 fees."
A Bank of America branch stands in Manhattan on March 15, 2023 in New York City. (Spencer Platt/Getty Images / Getty Images)
Bank of America said it has not been charging the extra fee for the past 18 months. In 2022, the bank eliminated every fee except the overdraft fee, which was reduced from $35 to $10.
EXPERTS SAY CFPB CUTTING OVERDRAFT FEES COULD HURT CONSUMERS
"We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022," a Bank of America spokesperson told FOX Business.
As a result, "revenue from these fees has dropped more than 90%," the spokesperson continued.
A customer uses an ATM at a Bank of America branch in Boston on Oct. 11, 2017. (REUTERS/Brian Snyder/File Photo / Reuters Photos)
The CFPB also accused the bank of illegally withholding "promised credit card account bonuses, such as cash rewards or bonus points to tens of thousands of consumers" who submitted applications over the phone or in person. Regulators also accused the bank of denying "sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems."
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Bank of America employees are also accused of illegally applying "for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization," since at least 2012, according to the CFPB.
In order to do this, the bank illegally used consumers’ credit reports, without their permission, to complete applications, the CFPB said.
As a result, "consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors," the CFPB said.
Bank of America serves 68 million people and small business clients.