Bank of America has been mandated to pay $150 million (£116 million) in penalties for unauthorized credit card openings.
Regulators uncovered that the bank also engaged in “double-dipping” fees from customers and withheld promised reward bonuses.
The infractions at the United States’ second-largest bank impacted hundreds of thousands of customers and, in some instances, date back to 2012, according to regulators. Bank of America has neither acknowledged nor refuted the findings of the investigation.
The bank has received an order to reimburse customers and pay a combined total of $150 million in penalties to the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).
According to the CFPB, customer refunds are anticipated to exceed $80 million. The regulator revealed that Bank of America unlawfully applied for and enrolled consumers in credit card accounts without their consent or knowledge in order to assist bank employees in achieving sales incentive objectives.
As stated by the CFPB, customers incurred unwarranted fees and experienced adverse impacts on their credit profiles.
Bank of America is additionally accused of engaging in double-dipping by charging fees twice when a customer had insufficient funds in their account.
Bank of America subjected individuals to a $35 charge for declined transactions. However, the bank permitted the repeated imposition of fees for the same transaction.
The lender has announced that it has ceased charging the $35 fee for insufficient funds and has also reduced overdraft fees.
Bank of America took the step of eliminating sales goals for its credit card staff in January 2023 and has committed to maintaining this change for a minimum of three years.
Rohit Chopra, the Director of the CFPB, stated, “Bank of America engaged in wrongful practices such as withholding credit card rewards, double-dipping on fees, and opening accounts without customer consent.”
“These practices are unlawful and erode customer confidence. The CFPB is committed to putting a stop to such practices throughout the banking system.”
President Joe Biden has made a commitment to clamp down on the imposition of “junk fees” by companies in various sectors, including the sale of concert tickets and airline flights.
President Joe Biden has called on Congress to prohibit specific charges, such as early termination fees for mobile phone or pay TV services before the contract term ends. In line with this objective, the CFPB intensified its examination of banks and their customer fees in 2022, actively seeking feedback from consumers regarding practices like overdraft fees.
The White House announced that its efforts have resulted in over $5 billion in annual savings for the public, as several banks, including Bank of America, voluntarily eliminated or reduced charges. Bank of America reported a decline of over 90% in the revenue generated from overdraft and non-sufficient fund fees, following changes implemented in the first half of 2022.
In 2014, the bank received a $20 million fine and was directed to compensate customers with over $700 million due to deceptive marketing and unlawful charges associated with its credit cards. Furthermore, it was mandated to pay $225 million in penalties last year for mishandling the distribution of unemployment benefits.
Source : bbc.com
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