Bank of America was ordered to pay more than $100 million to customers for double-charging accounts with insufficient funds, denying reward payments to credit card holders and using personal data to open accounts without a client’s knowledge, the Consumer Financial Protection Bureau said on Tuesday.
The second-largest U.S. bank harmed hundreds of thousands of customers over a period of several years and across multiple products, the federal agency said.
In addition to the customer payment, the bank must pay $150 million in penalties, the agency added.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” Rohit Chopra, director of the CFPB, said in a statement.
“These practices are illegal and undermine customer trust,” Chopra added. “The CFPB will be putting an end to these practices across the banking system.”
Under company policy, the bank imposed a $35 fee when a client purchase was denied due to insufficient funds, the CFPB said. However, the bank went further, charging the fee multiple times based on a single faulty transaction, the agency added.
Carried out over multiple years, this practice known as double-dipping generated “substantial additional revenue” for the company, CFPB said.
Customers use the ATM at a Bank of America branch in lower Manhattan, July 18, 2017, in New York City.
Spencer Platt/Getty Images, FILE
In a statement to ABC News, Bank of America said it no longer charges the fee for insufficient funds.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022," a bank spokesperson said. "As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent.”
In another alleged practice, Bank of America offered cash and points for customers who signed up for a credit card in an effort to compete with rival banks, the CFPB said. In turn, the company illegally withheld the bonuses from “tens of thousands of customers,” the agency added.
Bank of America, the agency said, also illegally applied for credit cards and bank accounts using customer information without their consent.
For more than a decade, the bank used customer information, such as credit reports, to complete applications under customers’ names, the agency noted.
In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices.
The company also paid a combined $235 million in fines last year for illegal garnishment and failed disbursement of state unemployment benefits during the COVID-19 pandemic, the agency said.
The bank, the agency said, serves 68 million individual and small-business clients and holds $1.9 trillion in domestic deposits.
Bank of America shares inched upward less than a quarter of a percentage-point in early morning trading.
