After an investigation conducted by the Consumer Financial Protection Bureau’s (CFPB) found that Bank of America participated in illegal practices, the bank was ordered to pay more than $250 million to customers and in penalties. The illegal practices included double charging for insufficient funds, withholding reward bonuses, and illegally opening consumer accounts.
CFPB said Bank of America implemented a “double-dipping scheme” to “harvest junk fees” from customers and those actions are “illegal and undermine customer trust.”
“Building a business model by double dipping on fees is simply not legal, and that’s why we’ve sanctioned Bank of America and ordered them to pay back customers they cheated,” Rohit Chopra, director of CFPB, said.
Bank of America is accused of taking “advantage of hundreds of thousands of customers across multiple product lines over several years” by repeatedly charging banking customers for the same overdraft fee, withholding bonuses from credit card customers and signing customers up for credit cards without their knowledge or permission, Causes.com reported.
“That’s essentially taking over someone’s identity and exploiting it financially, and it’s totally improper. It’s totally inexcusable,” Chopra said.
According to Causes.com, Bank of America has participated in illegal practices prior to this: The bank “received a $727 million penalty from CFPB in 2014 for deceptive marketing, a $20 million fine for charging customers for services they never received, and two penalties in 2022 amounting to $235 million.”
“Bank of America is a repeat offender,” Mike Litt, director of U.S. Public Interest Research Group Consumer Campaign, said. “Being a household name that has been punished before didn’t stop it from allegedly cheating customers out of tens of millions of dollars in fees and credit card rewards and opening up accounts without their authorization.”
In response to the accusations, Naomi R. Patton, Bank of America’s senior vice president of Media Relations, said the bank voluntarily reduced overdraft fees, eliminated “non-sufficient fund fees,” and dropped the overdraft fee from $35 to $10 in 2022, which resulted in a drop in revenue of over 90 percent.