Bank of America, the second-largest bank in the United States, has been hit with a $150 million fine by the Consumer Financial Protection Bureau (CFPB) for engaging in deceptive practices that harmed hundreds of thousands of its customers.
The CFPB stated that the bank charged multiple $35 overdraft fees for the same transaction, failed to properly issue rewards to credit card users, and enrolled customers in card accounts without their consent. In addition to the penalties, Bank of America is required to pay approximately $80.4 million in restitution to customers who were unfairly charged bogus fees, on top of the $23 million already paid to customers who were wrongly denied card awards.
According to the CFPB, Bank of America’s deceptive practices include charging multiple $35 overdraft fees for a single transaction, which resulted in financial burdens for its customers. Additionally, the bank failed to properly provide rewards to credit card users, depriving them of benefits they were entitled to. Another concerning practice was the unauthorized enrollment of customers in card accounts without their knowledge or consent, potentially leading to additional fees and complications.
As a result of these misconducts, Bank of America has been ordered to pay a total of $150 million in penalties, with $80.4 million dedicated to compensating customers who were unfairly charged bogus fees. This is in addition to the $23 million the bank has already paid to customers who were wrongly denied card rewards. The penalties serve as a significant financial blow to the bank and highlight the severity of the deceptive practices employed.
In response to the CFPB’s findings, Bank of America spokesman Bill Halldin stated that the bank had voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. These actions resulted in a drastic 90% drop in revenue generated from these fees. While the bank has taken steps to address the issues, the imposed penalties underscore the need for stricter oversight and consumer protection.
The CFPB’s action against Bank of America shows that deceptive practices and customer abuses were not isolated incidents limited to the Wells Fargo fake accounts scandal in 2016. While Wells Fargo faced significant regulatory repercussions for creating millions of fraudulent accounts, other financial institutions have also been found guilty of similar lapses. U.S. Bank, for instance, paid a $37.5 million fine in the previous year for enrolling customers in unauthorized accounts.
Bank of America’s $150 million fine imposed by the Consumer Financial Protection Bureau highlights the deceptive practices and consumer abuses the bank engaged in, including charging multiple overdraft fees, failing to issue credit card rewards, and enrolling customers in card accounts without consent. The penalties and required restitution underscore the seriousness of these infractions and the need for stronger consumer protections.
This case serves as a reminder that financial institutions must uphold transparency and trust to maintain a healthy banking system. Regulatory authorities will continue to monitor the industry closely, ensuring that deceptive practices are identified and addressed to safeguard customers’ interests.
Kaitlin Welch manages to cover anything. She is our freelance contributor. Kristie is responsible for covering reporting in finance and business News categories. Kaitlin has experience of 5 years as a reporter to News insights. Kaitlin writes related to the News Category.
