Bank Of America Accused Of Opening Fake Accounts And Charging Illegal Junk Fees
New York – Federal regulators accused Bank of America on Tuesday (July 11) of harming customers by double-dipping on fees, withholding credit card rewards, and opening fake accounts.
The Consumer Financial Protection Bureau (CFPB) ordered Bank of America (BAC) to pay more than $100 million to customers and $90 million in penalties. The Office of the Comptroller of the Currency (OCC) also ordered the bank to pay $60 million in fines.
Some of the allegations are reminiscent of the Wells Fargo scandal last decade that involved opening millions of bank accounts without customer authorization. Wells Fargo has paid billions in fines after it was determined that the San Francisco bank opened millions of unauthorized bank accounts in order to meet unrealistic sales goals.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” CFPB Director Rohit Chopra said in a statement. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Bank of America, based in Charlotte, North Carolina, serves 68 million people and small business clients. The bank had $2.4 trillion in consolidated assets and $1.9 trillion in domestic deposits as of March 31, making it the second-largest bank in the U.S.
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 said. The agency determined that the bank double-dipped by allowing fees to be repeatedly charged for the same transaction.
The bank said that it voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of last year.
Bank of America also offered people cash rewards and bonus points when signing up for a card, but the CFPB said the bank illegally withheld promised credit card account bonuses.
Since at least 2012, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without their knowledge or authorization, the CFPB said.
In 2014 the CFPB ordered Bank of America to pay $727 million for illegal credit card practices. Last year it was ordered to pay a $10 million civil penalty over unlawful garnishments. Also, in 2022, the CFPB and OCC fined the bank $225 million and required it to pay hundreds of millions of dollars in redress to consumers for botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.