By: April Carson
Bank of America is obligated to compensate customers with over $100 million due to the duplication of certain fees, the withholding of reward bonuses, and the unauthorized opening of accounts. This action was prompted by the Consumer Financial Protection Bureau, which found accounts were opened in customers’ names without their knowledge or consent.
On Tuesday, the Consumer Financial Protection Bureau announced that Bank of America would be paying a total of $150 million in penalties. Of this amount, $90 million will go to Bank of America's own organization, while the remaining $60 million will be paid to the OCC.
The bank's practice of charging duplicate fees was deemed illegal by the Office of the Comptroller of the Currency. Bank of America had been charging overdraft fees to customers who had already paid the fee on another account. Overdraft fees are often charged when a customer has insufficient funds in their bank account.
Headquartered in Charlotte, North Carolina, Bank of America caters to a staggering 68 million individuals and small business clients. With consolidated assets amounting to $2.4 trillion and domestic deposits reaching $1.9 trillion as of March 31, this financial institution proudly holds the position of the second-largest bank in the United States.
The payments are part of an effort by the bank to improve customer service and ensure that customers receive the restitution they deserve. Bank of America's CEO, Brian Moynihan, has since expressed his commitment to honoring consumer protection laws and providing a higher quality of service for their clients.
According to the Consumer Financial Protection Bureau (CFPB), Bank of America used to implement a policy where customers were charged $35 if a transaction was declined due to insufficient funds in their account. The agency found that the bank engaged in double-dipping by repeatedly applying fees for the same transaction.
The bank announced a proactive measure last year, voluntarily reducing overdraft fees and eliminating all non-sufficient fund fees during the first half. This action showcases the bank's commitment to improving customer experience and fostering financial well-being.
Bank of America also provided individuals with cash rewards and bonus points upon card enrollment. However, the Consumer Financial Protection Bureau (CFPB) determined that the bank unlawfully withheld promised credit card account bonuses. The $60 million penalty is to be paid out to customers who are eligible for restitution.
According to the CFPB, Bank of America employees have been unlawfully submitting applications for credit card accounts and enrolling consumers in them without their knowledge or consent since at least 2012. The CFPB and the OCC have identified over 1.4 million instances of such activity, with customers incurring more than $15 million in fees.
After it was discovered that Wells Fargo had opened millions of unauthorized bank accounts to meet unattainable sales targets, the San Francisco-based bank faced substantial fines amounting to billions of dollars. This revelation sheds light on the bank's questionable practices and highlights the need for improved accountability and ethical standards in the financial industry.
In a prepared statement, CFPB Director Rohit Chopra revealed that "Bank of America has unlawfully withheld credit card rewards, charged excessive fees, and opened unauthorized accounts. These illicit practices not only violate the law but also erode customer confidence and trust."
Bank of America is now responsible for repaying customers and ensuring that it does not engage in such practices again. Furthermore, the bank must implement measures to ensure that all customers are adequately informed about their rights and the services they are being offered.
In 2014, Bank of America was mandated by the CFPB to compensate $727 million for engaging in illegal credit card practices. Additionally, just last year, it faced a $10 million civil penalty due to its involvement in unlawful garnishments. In 2022, Bank of America faced significant penalties. The CFPB and OCC fined the bank $225 million and mandated payments of hundreds of millions of dollars to compensate consumers. These actions were taken due to mishandled disbursement of state unemployment benefits during the peak of the COVID-19 pandemic.
Bank of America's latest legal penalty underscores the need for greater oversight and enforcement in the financial industry. The CFPB has implemented a clear zero-tolerance policy and will continue to take action against banks that have violated consumer protection laws.
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April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on bossbabymav.com
To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav
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