Federal regulators on Tuesday ordered Bank of America to pay $250 million in fines to settle claims that it double-dipped on fees, withheld credit card reward bonuses and opened fake customer accounts.
The Consumer Financial Protection Bureau ordered the Charlotte, North Carolina-based lender to pay $100 million to harmed customers and $90 million in fines, according to a press release. The bank will also pay $60 million in fines to the Office of the Comptroller of the Currency.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” CFPB Director Rohit Chopra said in a statement on Tuesday. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
From 2012 to early 2021, the bank advertised sign-up bonuses for its credit card on its website, but did not make it clear that the reward was only available to customers who applied online, the CFPB claimed.
“[Bank of America] created the misleading net impression that the SignUp Bonus offers were available to all applicants, including those who applied in person or via phone call,” the CFPB wrote in its consent order.
Regulators also accused the bank of charging customers repeat non-sufficient funds fees on a single transaction.
“Bank of America would assess these repeat non-sufficient fund fees potentially as soon as the next day after the initial transaction,” the CFPB claimed.
From September 2018 until February 2022, the bank generated “hundreds of millions of dollars” in such fees, the OCC and the CFPB alleged.
“The bank’s disclosures did not clearly explain that multiple fees could result from the same transaction. Additionally, customers had no ability to know when or if a merchant would resubmit a transaction to the bank for payment and therefore could not reasonably avoid the assessment of multiple fees for the same transaction,” the OCC said in a statement.
And in charges that echo Wells Fargo’s 2016 fake-accounts scandal, regulators accused Bank of America employees of opening credit card accounts without customers’ consent to reach now disbanded sales-based incentive goals.
“In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications,” according to the CFPB. “Because of Bank of America’s actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors.”
In a statement to Banking Dive, Bank of America spokesperson Bill Halldin said the company reduced overdraft fees and eliminated all non-sufficient fund fees last year.
“As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent,” he said.
Bank of America’s credit card and fee practices have come under regulatory scrutiny before.
The CFPB ordered the bank in 2014 to pay $727 million to customers harmed by the firm’s alleged illegal credit card practices.
The bureau fined the firm $10 million in May 2022 for allegedly processing illegal, out-of-state garnishment orders against its customers’ bank accounts.
And the CFPB and OCC fined Bank of America $225 million last year over its handling of unemployment insurance and benefits payments during the COVID-19 pandemic.
Tuesday’s fines against Bank of America comes as the CFPB and the Biden administration have promised to crack down on junk fees.