Bank of America has been ordered to pay $250 million in penalties for “systematically double-dipping” on overdraft fees, withholding credit card reward bonuses, and opening accounts without customer authorization.
The $2.4 trillion bank was ordered to pay $90 million in penalties to the CFPB and another $30 million to the OCC. As part of the settlement announced July 11, the Charlotte, N.C.-based bank must issue more than $100 million in customer refunds.
The fines were levied after BoA allegedly generated additional revenue by illegally allowing customers to face multiple $35 fees for a single declined transaction. “The bank’s disclosures did not clearly explain that multiple fees could result from the same transaction,” the OCC stated. “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.”
BoA also allegedly withheld cash and points rewards on credit cards to tens of thousands of customers. “The bank failed to honor rewards promises for consumers who submitted in-person or over-the-phone applications,” the CFPB stated. “The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.”
According to the regulators, the bank has misappropriated sensitive customer information to open credit card accounts without authorization since at least 2012. “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,” the CFPB stated.
The fine was one of the largest Bank of America has faced in the last decade. In 2014, the CFPB ordered Bank of America to pay $727 million back to consumers in redress for illegal credit card practices. Last year, the CFPB and OCC fined BoA $225 million and required it to pay hundreds of millions of dollars to consumers for improperly disbursing state unemployment benefits during the pandemic.