US regulators have issued a $150m fine to Bank of America for charging junk fees, withholding credit card rewards and opening fake accounts. The bank has also put aside $100m to redress customers.
The Consumer Financial Protection Bureau (CFPB) has ruled that Bank of America systematically double-dipped on non-sufficient fund (NSF) fees and withheld reward bonuses promised to credit card customers.
In addition, the CFPB found that the bank misappropriated sensitive personal information to open accounts without customer knowledge or authorisation.
Bank of America is the second-largest bank in the US, serving 68m customers. It holds $2.4trn in consolidated assets and $1.9trn in domestic deposits.
According to the CFPB, the bank harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services.
From September 2018 until February 2022, Bank of America charged consumers a $35 NSF fee each time it returned an unpaid Automated Clearing House (ACH) transaction or cheque payment.
This charge was applied even if the transaction was re-presented by the merchant several times and the bank had already charged an NSF fee on the same transaction when it was first presented.
The CFPB also said Bank of America “double-dipped” by allowing fees to be repeatedly charged for the same transaction.
Over the years, this practice brought in hundreds of millions of dollars in fees for the bank.
Where did all the rewards go?
At the same time, Bank of America withheld promised credit card account bonuses, such as cash rewards or bonus points, which affected tens of thousands of customers.
The bank also promised a sign-up bonus for a rewards card on its website, making it appear as if it was available to all applicants, but it later denied the bonus to consumers who applied over the phone or in person and not online.
Other sign-up bonuses were denied because bank employees did not accurately complete the application process.
In certain instances, Bank of America opened credit card accounts without consumer consent in response to sales pressure or to obtain incentive rewards.
A bill for Bank of America
Overall, Bank of America will pay a total of $90m in penalties to the CFPB and $60m in penalties to the Office of the Comptroller of the Currency (OCC), which also found that the bank’s double-dipping on fees was illegal.
In response to a comment request, a Bank of America spokesperson said the bank “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022”, which resulted in more than a 90 percent drop in revenue from these fees.
Bank of America has previously faced several regulatory actions by the CFPB.
In 2014, the bank paid $727m in redress for illegal credit card practices, while in May 2022 the CFPB ordered Bank of America to pay a $10m civil penalty over unlawful garnishments.
Later in July 2022, the CFPB and OCC fined Bank of America a further $225m for unlawfully blocking state unemployment benefits during the COVID-19 pandemic due to a faulty fraud detection programme.