WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) ordered Bank of America to pay greater than $100 million to prospects for systematically double-dipping on charges imposed on prospects with inadequate funds of their account, withholding reward bonuses explicitly promised to bank card prospects, and misappropriating delicate private data to open accounts with out buyer data or authorization. The Office of the Comptroller of the Currency (OCC) additionally discovered that the financial institution’s double-dipping on charges was unlawful. Bank of America pays a complete of $90 million in penalties to the CFPB and $60 million in penalties to the OCC.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” mentioned 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.”
Bank of America (NYSE:BAC) is a worldwide, systemically essential financial institution serving 68 million individuals and small business shoppers, and has one of many largest coverages in shopper monetary providers within the nation. As of March 31, 2023, the financial institution had $2.4 trillion in consolidated belongings and $1.9 trillion in home deposits, which makes it the second- largest financial institution within the United States.
Bank of America harmed a whole lot of hundreds of customers over a interval of a number of years and throughout a number of product traces and providers. Specifically, Bank of America:
- Deployed a double-dipping scheme to reap junk charges: Bank of America had a coverage of charging prospects $35 after the financial institution declined a transaction as a result of the client didn’t have sufficient funds of their account. The CFPB’s investigation discovered that Bank of America double-dipped by permitting charges to be repeatedly charged for a similar transaction. Over a interval of a number of years, Bank of America generated substantial extra income by illegally charging a number of $35 charges.
- Withheld money and factors rewards on bank cards: To compete with different bank card corporations, Bank of America focused people with particular provides of money and factors when signing up for a bank card. Bank of America illegally withheld promised bank card account bonuses, resembling money rewards or bonus factors, to tens of hundreds of customers. The financial institution did not honor rewards guarantees for customers who submitted in-person or over-the-phone purposes. The financial institution additionally denied sign-up bonuses to customers because of the failure of Bank of America’s business processes and programs.
- Misused Sensitive Customer Information to Open Unauthorized Accounts: From no less than 2012, as a way to attain now disbanded sales-based incentive targets and analysis standards, Bank of America workers illegally utilized for and enrolled customers in bank card accounts with out customers’ data or authorization. In these circumstances, Bank of America illegally used or obtained customers’ credit score reviews, with out their permission, to finish purposes. Because of Bank of America’s actions, customers have been charged unjustified charges, suffered unfavourable results to their credit score profiles, and needed to spend time correcting errors.
This isn’t the primary enforcement motion Bank of America has confronted for criminal activity in its shopper business. In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for unlawful bank card practices. In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty over illegal garnishments and, later in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay a whole lot of hundreds of thousands of {dollars} in redress to customers for botched disbursement of state unemployment advantages on the top of the COVID-19 pandemic.
Enforcement Action
Under the Consumer Financial Protection Act, the CFPB has the authority to take motion towards establishments violating shopper monetary safety legal guidelines. Bank of America’s practices violated the Act’s prohibition on unfair and misleading acts or practices. Bank of America additionally violated the Fair Credit Reporting Act by utilizing or acquiring shopper reviews with no permissible goal in reference to unauthorized bank cards, in addition to the Truth in Lending Act and its implementing Regulation Z, by issuing bank cards to customers with out their data or consent.
The CFPB’s orders require Bank of America to:
- Stop its repeat offenses: Under the phrases of right this moment’s orders, Bank of America should cease opening unauthorized accounts, and the financial institution should disclose materials limitations on any rewards playing cards bonuses and supply bonuses as marketed. Additionally, whereas Bank of America has usually decreased its reliance on junk charges, the financial institution can also be strictly prohibited from charging repeat non-sufficient funds charges sooner or later.
- Pay redress to harmed customers: The orders require Bank of America to compensate customers charged illegal non-sufficient funds charges and who haven’t already been made complete by the financial institution, totaling roughly $80.4 million in shopper redress. The financial institution should additionally compensate customers who incurred prices stemming from the unauthorized opening of latest bank card accounts, and any prospects improperly denied bonuses whom the financial institution has not already made complete. The financial institution beforehand paid round $23 million to customers who have been denied rewards bonuses.
- Pay $90 million in penalties to the CFPB: Bank of America pays a $60 million penalty to the CFPB for charging repeat non-sufficient funds charges, and a $30 million penalty to the CFPB for its bank card rewards practices and for opening unauthorized accounts. The penalties will likely be deposited into the CFPB’s victims reduction fund. Separately, Bank of America may also pay a $60 million penalty to the OCC for its double-dipping charge practices.
Read right this moment’s order towards Bank of America for its unauthorized bank card accounts, false guarantees on bank card rewards, and utilizing prospects’ credit score reviews with out permission.
Read right this moment’s CFPB order towards Bank of America for its double-dipping charge scheme.
Read extra concerning the CFPB’s work to guard customers from junk charges.
Consumers can submit complaints about monetary services by visiting the CFPB’s web site or by calling (855) 411-CFPB (2372).
Employees who imagine their corporations have violated federal shopper monetary safety legal guidelines are inspired to ship details about what they know to [email protected]. To be taught extra about reporting potential trade misconduct, go to the CFPB’s web site.
The Consumer Financial Protection Bureau (CFPB) is a twenty first century company that helps shopper finance markets work by making guidelines more practical, by constantly and pretty imposing these guidelines, and by empowering customers to take extra management over their financial lives. For extra data, go to www.consumerfinance.gov.
