The Consumer Finance Protection Bureau (CFPB) announced Tuesday that it is taking action against Bank of America for charging junk fees, withholding credit card rewards, and opening fake accounts.
“These practices are illegal and undermine customer trust,” said CFPB Director Rohit Chopra in a statement. “The CFPB will be putting an end to these practices across the banking system.”
On top of $150 million in penalties, the bank will have to pay consumers $100 million to compensate for its deceptive practices.
And this isn’t the first time that Bank of America has come under fire from the CFPB. Last year, the bank had to pay a $10 million penalty for unlawful garnishments and a $225 million fine after it "botched" the disbursement of state unemployment benefits during the pandemic.
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Photo credit: anouchka/istockphotoWhat Did Bank of America Do This Time?
Charged Junk Fees: If a customer didn’t have enough money in their account when a transaction went through, Bank of America would charge them a $35 insufficient funds or overdraft fee. But the bank abused the policy by “double-dipping” these penalties, charging customers multiple times for a single transaction, the CFPB said.
Opened Fake Accounts: Bank of America employees would enroll customers into credit card accounts without their knowledge to reach sales goals, the CFPB found. In applying for these fake accounts, the bank also illegally used or obtained customers’ credit reports without their permission.
Withheld Credit Card Rewards: Although Bank of America advertised credit card rewards to attract customers, the bank failed to deliver on those promises, withholding bonuses from tens of thousands of customers. Consumers who were denied credit card rewards have already been paid around $23 million, according to the federal regulator.
How Do I Get Compensated?
The short answer is that you don’t have to do anything.
Eligible customers — those who were charged junk fees or enrolled into fake accounts — will automatically receive a check in the mail or a deposit, CNN reports. The CFPB will also update its website later this month with a Bank of America contact for customers who have additional questions.
The Bottom Line
Like Wells Fargo, Bank of America has faced numerous scandals over the past years, including having to pay $727 million in 2014 for illegal credit card practices. Consumers who are tired of these extra fees should look into banking with a credit union. These nonprofit organizations — owned and controlled by their members — prioritize their customers, offering fewer fees and better interest rates.
