Bank Of America Ordered To Pay Over $250 Mln For Consumer Protection Violations
Federal regulators announced on Tuesday that Bank of America has been found guilty of harming customers through various violations of consumer financial protection laws.
The Consumer Financial Protection Bureau or CFPB and the Office of the Comptroller of the Currency or OCC have ordered the bank to pay a total of over $250 million in fines and restitution. These penalties come as a result of Bank of America double-dipping on fees, withholding credit card rewards, and opening unauthorized accounts, reminiscent of the Wells Fargo scandal of the previous decade.
Bank of America, the second-largest bank in the United States, serving millions of individuals and small businesses, has been accused of engaging in unlawful practices that have undermined customer trust. The CFPB Director, Rohit Chopra, emphasized the illegality of these practices and expressed the bureau’s commitment to putting an end to such behavior across the banking system.
The violations identified by the CFPB and OCC spanned multiple product lines and services and affected hundreds of thousands of consumers over several years. One of the practices involved Bank of America repeatedly charging customers $35 fees for the same declined transaction. If a third-party merchant resubmitted a charge to the customer’s account after the initial decline, the bank would charge additional fees for insufficient funds or overdraft. The bank’s disclosures failed to clarify that multiple fees could result from the same transaction, leaving customers unaware and unable to avoid these charges.
In addition, Bank of America unlawfully withheld special cash and points bonuses promised to tens of thousands of new credit card customers. The bank also engaged in deceptive practices to meet sales-based goals by enrolling consumers in credit card accounts without their knowledge or authorization. Employees would access consumers’ credit reports without consent, leading to unjustified fees, negative impacts on credit reports, and subsequent efforts by customers to rectify the errors caused by the bank.
Bank of America stated that it voluntarily eliminated these problematic fees last year, leading to a significant reduction in revenue from these charges. The bank’s spokesman emphasized the industry-leading changes made by the bank and the subsequent drop of more than 90 percent in revenue generated from these fees.
The penalties imposed by the CFPB and OCC serve as a reminder of the importance of safeguarding consumer rights and holding financial institutions accountable for their actions. The regulatory bodies have emphasized their commitment to protecting customers and preventing similar violations throughout the banking system.
Source: Read Full Article