An investigation found that Bank of America raked in tens of millions of dollars in resubmitted insufficient funds fees. The bank also illegally opened credit cards without customers knowledge.
Bank of America, the nation’s second largest bank, has been ordered to pay more than $100 million to customers for double charging insufficient fund fees, withholding reward bonuses and opening accounts without customers’ knowledge or permission. The bank is also on the hook for an additional $150 million in penalties for the same violations.
The Consumer Financial Protection Bureau announced Tuesday that an investigation found that Bank of America harmed hundreds of thousands of customers across multiple product lines over a period of several years through a series of illegal practices. As a result, Bank of America was ordered to pay over $100 million to customers and another $90 million in penalties. A separate $60 million fine has been ordered by the Office of the Comptroller of the Currency for violating laws around overdraft fees.
CFPB Director Rohit Chopra said in a news release that Bank of America’s double-dipping on fees, opening accounts without customer consent and withholding rewards « are illegal and undermine customer trust, » practices he said the CFPB will put an end to across the banking system.Bank of America’s « double-dipping scheme »
According to the CFPB, Bank of America utilized a « double-dipping scheme » to « harvest junk fees » from customers. It did so by charging people $35 whenever they didn’t have enough funds available, but repeatedly charged customers for the same transaction, which the CFPB said generated « substantial additional revenue ».
Chopra told NPR Business Correspondent David Gura, « Building a business model by double dipping on fees is simply not legal, and that’s why we’ve sanctioned Bank of America and ordered them to pay back the customers they cheated. »
The OCC said it found that the bank charged « tens of millions of dollars » in fees in resubmitted transactions, in violation of Section 5 of the Federal Trade Commission Act, which prevents financial institutions from using unfair or deceptive acts and practices.
