On Tuesday, the Consumer Financial Protection Bureau (CFPB) announced that Bank of America will be fined and required to compensate customers who had been harmed by the bank’s illegal and deceptive activities.
The Consumer Financial Protection Bureau (CFPB) has demanded that Bank of America pay more than $100 million to its customers for a series of illegal banking practices that include double-charging insufficient funds fees, withholding promised credit card rewards, and unauthorized opening of accounts using sensitive customer data.
In addition to the CFPB’s order, the Office of the Comptroller of the Currency (OCC) has deemed the bank’s double-dipping on fees as “illegal.” Consequently, the bank will be required to pay $90 million in penalties to the CFPB and an additional $60 million to the OCC.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
According to the statement released by CFPB, the illegal practices imposed by Bank of America affected hundreds of thousands of consumers over several years and across multiple product lines and services. Specifically, Bank of America:
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Deployed a double-dipping scheme to harvest junk fees: 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’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.
Withheld cash and points rewards on credit cards: To compete with other credit card companies, Bank of America targeted individuals with special offers of cash and points when signing up for a credit card. Bank of America illegally withheld promised credit card account bonuses, such as cash rewards or bonus points, to tens of thousands of consumers. The bank failed to honor rewards promises for consumers who submitted in-person or over-the-phone applications. The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.
Misused Sensitive Customer Information to Open Unauthorized Accounts: From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization. In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. Because of Bank of America’s actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors.
I doubt that the fine outweighed what they gained through these practices. With a $95 billion dollar revenue last year this is a meaningless operating cost.
They’ve unfortunately been doing scummy things for a very long time as well. Over a decade ago I banked with them and my account went a few dollars negative. They charged eight dollars a day every day for like a month and a half and refused to reverse it so I just let it go to collections.
It’s very possible they intentionally shuffled your deposits and withdrawals around to make your account go negative even if you had the funds available at the time of the transaction. Banks have been caught doing this in the past in order to maximize overdraft fees.
Personally, I think everyone should decline overdraft protection on their accounts. If you don’t have the funds your card will be declined rather than being approved with an additional $20 overdraft fee.
I don’t get why yearly revenue isn’t taken into account when deciding penalties. It makes no sense except to deceive naive people who don’t realize it’s really nothing to the entity being “punished”.
Because the same people or friends of the people who work at corporations are the ones at congress. They are just doing theatre while shaking hands in meetings.