The Consumer Financial Protection Bureau (CFPB) ordered Bank of America to pay more than $100 million to customers for double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.
The Office of the Comptroller of the Currency (OCC) also found that the bank’s double-dipping on fees was illegal. Bank of America will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC.
Bank of America is believed to be Delaware’s second largest banking employer, with credit card and other operations in northern Delaware. The company is based in Charlotte, NC.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
The CFPB alleged that Bank of America harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services.
- Deployed a double-dipping scheme to harvest junk fees: Bank of America had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The CFPB’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.
- Withheld cash and points rewards on credit cards: To compete with other credit card companies, Bank of America targeted individuals with special offers of cash and points when signing up for a credit card. Bank of America withheld promised credit card account bonuses, such as cash rewards or bonus points, to tens of thousands of consumers. The bank failed to honor rewards promises for consumers who submitted in-person or over-the-phone applications. The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.
- Misused Sensitive Customer Information to Open Unauthorized Accounts: From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization. In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. Because of Bank of America’s actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors, the agency alleged.
In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for credit card practices. In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty over garnishments and, later in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay hundreds of millions of dollars in redress to consumers for disbursement of state unemployment benefits at the height of the Covid-19 pandemic.
The bank indicated that it has adjusted its practices and sharply reduced insufficient funds revenue.
