Bank of America has been ordered to pay $150 million (£116 million) in penalties for opening credit cards without customers' permission.
In addition, regulators discovered that the bank "double-dipped" customer fees and withheld promised incentive bonuses. In some cases, the violations at the second-largest bank in the United States trace back to 2012, according to regulators.
Bank of America has neither acknowledged nor denied the findings of the investigation. The bank has been ordered to compensate customers and pay the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) a total of $150 million in penalties.
The CFPB expects customer refunds to be worth more than $80 million. Bank of America, according to the regulator, illegally applied for and enrolled consumers in credit card accounts without their knowledge or consent in order to help bank employees meet sales incentive objectives.
The CFPB stated that customers were charged unjustified fees and that their credit profiles suffered as a result. Bank of America is also accused of charging fees twice when a customer's account contained insufficient funds. When a transaction was declined, customers were charged $35. However, Bank of America permitted multiple fees to be assessed for the same transaction. Since discontinuing the $35 fee for insufficient funds, the lender has also reduced overdraft fees.
Additionally, beginning in January 2023, Bank of America eliminated sales objectives for its credit card employees and agreed to maintain this change for at least three years. Bank of America improperly withheld credit card rewards, double-dipped on fees, and opened accounts without consent, according to Consumer Financial Protection Bureau Director Rohit Chopra.These practices are unlawful and undermine consumer trust. The CFPB will prohibit these practices throughout the complete banking industry.
President Joe Biden has vowed to crack down on "junk fees" levied by businesses in a variety of industries, including the sale of concert tickets and airline flights. He has urged Congress to ban certain fees, such as those for terminating a mobile phone or pay television contract early.
In 2022, under his leadership, the CFPB increased its scrutiny of banks and their customer fees, soliciting consumer complaints about practices such as overdraft fees. The White House has stated that its drive has resulted in more than $5 billion in annual savings for the public. This is due to the fact that numerous financial institutions, including Bank of America, have voluntarily eliminated or lowered the fees.
Due to the modifications that were implemented in the first half of 2022, Bank of America said that the amount of money it had made from overdraft and non-sufficient fund fees had decreased by more than 90 percent.
In 2014, the bank was compelled to reimburse more than $700 million to its customers and fined $20 million for deceptive marketing practices and illegal fees that were associated with its credit cards. In addition to that, it was compelled to pay a penalty of $225 million for botching the distribution of unemployment benefits the year before.