Bank of America, the second-largest bank in the United States, has recently been hit with allegations of violating various consumer financial protection laws. The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have both found Bank of America guilty of not honoring credit card rewards, double-dipping on fees, and opening fake accounts. These practices, according to the CFPB, have harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services.
The Violations
Bank of America’s alleged transgressions are reminiscent of the Wells Fargo crisis of the previous decade, in which millions of unauthorized bank accounts were opened. The Consumer Financial Protection Bureau alleges that Bank of America illegally withheld credit card rewards, doubled up on fees, and established accounts without permission. In addition to being illegal, these actions dishearten potential buyers.
The bank would charge the customer $35 when transactions get declined due to insufficient money. Customers were charged the same fees numerous times for the same transaction, which cost the company tens of millions of dollars. This could occur if the third-party merchant retried charging the customer’s account after the initial attempt was declined, but there still wasn’t enough money in the account to cover the transaction. If there are insufficient funds in a customer’s account, either a $35 inadequate funds fee or an overdraft fee of $35 will be charged. The bank did not make clear that there would be multiple fees for the same transaction.
In addition, the bank would advertise sign-up bonuses in the form of cash or points for new credit card clients, but then fraudulently withhold such bonuses from tens of thousands of cardholders. In order to satisfy their goals and increase their evaluations, bank employees began illegally applying for and enrolling consumers in credit card accounts without their knowledge or authorization as early as 2012. When customers’ credit reports were utilized or obtained by the bank without their consent, those customers were unfairly charged, their credit was negatively impacted, and they had to take extra steps to correct banking issues.
The Fines Bank of America Must Pay
Bank of America must pay over $100 million to users and roughly $90 million in penalties to the CFPB as a result of the infractions disclosed by regulators. Bank of America has been fined $60 million by the OCC. Bank of America will have to fork over more than $250 million to regulatory bodies and affected consumers.
The bank has been subject to regulatory fines before. The Consumer Financial Protection Bureau ordered it to pay $727 million to deal with consumer complaints of bad credit card practices in 2014. A $10 million civil penalty for improper garnishments was levied against the company last year, and another $225 million was levied against the company for “botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.”
Changes Implemented by Bank of America
Changes to the bank’s overdraft policies were revealed last year. Bank overdraft rates were voluntarily lowered, and all non-sufficient fund fees were removed, beginning in the first part of 2022. More than 90% of the income from these fees has vanished as a result of these market-leading adjustments.
Eligibility for Payment
The Consumer Financial Protection Bureau has stated that consumers who believe they have been affected by the double charging of fees or the false account violation do not need to take any more action in order to obtain their money. Bank of America will be responsible for disbursing funds to those who qualify. The bank will credit your deposit account or mail you a check, depending on your preference.
Bank of America’s Reputation
Bank of America’s reputation has been negatively impacted by these allegations and the subsequent fines. The bank, which serves 68 million individuals and small businesses, has been accused of violating consumer financial protection laws multiple times. These violations undermine customer trust and may lead to customers switching to other banks.
Bank of America’s Response
The has responded to these allegations by announcing sweeping changes to overdraft services and eliminating non-sufficient fund fees. The bank also stated that it will make payments to customers who have been affected by the violations. However, the bank’s reputation has still been negatively impacted by these allegations and fines.
What Customers Should Do
If you are a Bank of America customer and think you may have been affected by these violations, you should check your account for any unauthorized transactions or fees. If you find any unauthorized transactions or fees, you should contact the bank’s customer service immediately to report the issue.
Conclusion
In conclusion, Bank of America has been accused of violating various consumer financial protection laws, including not honoring credit card rewards, double-dipping on fees, and opening fake accounts. These practices have harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services. As a result of the violations, Bank of America will have to pay over $100 million to users and roughly $90 million in penalties to the CFPB. The OCC has also ordered Bank of America to pay $60 million in fines. Bank of America’s reputation has been negatively impacted by these allegations and fines, and the bank has responded by announcing sweeping changes to overdraft services and eliminating non-sufficient fund fees. If you are a Bank of America customer and think you may have been affected by these violations, you should check your account for any unauthorized transactions or fees and contact Bank of America’s customer service immediately to report the issue.
FAQ
Q: What violations has Bank of America been accused of?
A: Bank of America has been accused of not honoring credit card rewards, double-dipping on fees, and opening fake accounts without customer consent. These practices have been found to be in violation of consumer financial protection laws.
Q: What fines does Bank of America have to pay as a result of the violations?
A: Bank of America will have to pay over $100 million to customers and roughly $90 million in penalties to the Consumer Financial Protection Bureau (CFPB). The Office of the Comptroller of the Currency (OCC) has also ordered the bank to pay $60 million in fines.
Q: Has Bank of America faced regulatory fines in the past?
A: Yes, the bank has faced regulatory fines in the past for illegal credit card practices and unlawful garnishments. Last year, the bank was ordered to pay $225 million to consumers for mishandling state unemployment benefits.
Q: What changes has Bank of America implemented in response to the violations?
A: Bank of America has announced sweeping changes to its overdraft services, reducing overdraft fees and eliminating non-sufficient fund fees. These changes have significantly reduced revenue from these fees.
Q: How will eligible customers receive their payment for the violations?
A: Eligible customers do not need to take action to receive their payment. Bank of America is responsible for sending payments to those affected, either by depositing funds into their accounts or sending a check.
Q: What should Bank of America customers do if they believe they have been affected by the violations?
A: Bank of America customers who suspect they have been affected should check their accounts for any unauthorized transactions or fees. If any are found, they should contact Bank of America’s customer service immediately to report the issue.
First reported on CNN
