Bank of America fined by US regulators over fake accounts and junk fees
The US Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay $150 million in penalties and more than $100 million to affected consumers for allegedly “illegally charging junk fees, withholding credit card rewards, and opening fake accounts”.
CFPB slaps $150m fine on Bank of America
The US regulator alleges that the bank “harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services”.
Allegations include deploying a double-dipping scheme to harvest junk fees. The CFPB writes: “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.”
The regulator claims the bank also withheld cash and points rewards on credit cards and denied sign-up bonuses to customers due to system failures.
Additionally, the CFPB alleges that the bank’s employees “illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization” and used customers’ credit reports without permission to fill out the applications.
The regulator has ordered the bank to “stop its repeat offenses”, compensate affected consumers, and pay $90 million in penalties to the CFPB along with a $60 million penalty to the Office of the Comptroller of the Currency (OCC) “for its double-dipping fee practices”.
This is not the first time Bank of America has been fined by US regulators. In 2014, it was fined $727 million for “illegal credit card practices”. In May 2022, the CFPB ordered the bank to pay a $10 million civil penalty over unlawful garnishments, and additionally in 2022, it was fined $225 million by the CFPB and OCC for the “botched disbursement” of unemployment benefits.
