The Consumer Financial Protection Bureau announced Tuesday that Bank of America faces some major financial penalties over accusations the bank illegally opened bank accounts and improperly charged junk fees.
The CFPB, which was formed in the wake of the 2008 financial crisis, has ordered Bank of America to pay more than $100 million to customers for “double-dipping” on fees imposed on those with insufficient funds in their accounts, in addition to other wrongdoings.
Additionally, the firm must pay $90 million in penalties to the CFPB and $60 million 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,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
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Bank of America has a policy by which it charges customers a $35 fee if a transaction is declined because of insufficient funds in their account. The CFPB contends that Bank of America was allowing those fees to be repeatedly charged for the same transaction over a period of years, double-dipping which generated “substantial revenue” for the firm.
The CFPB investigation also found that the North Carolina-based bank improperly withheld rewards points and cash rewards for credit card customers. The consumer watchdog said that Bank of America, in order to compete with other banks, targeted consumers with sign-on rewards for credit cards but then withheld those bonuses for tens of thousands of recipients.
The CFPB said that the bank failed to honor rewards promises for those who submitted in-person or over-the-phone applications.
Additionally, the CFPB said that from at least 2012, Bank of America illegally applied for and enrolled consumers in credit card accounts without their consent or knowledge. Bank of America illegally obtained those customers’ credit reports to complete the applications in order to meet now-defunct sales-based goals, according to the CFPB investigation.
The Washington Examiner reached out to Bank of America for comment but didn’t receive an immediate response.
The CFPB has gone after Bank of America in the past. In 2014, the watchdog ordered the firm to pay nearly $730 million to victims for illegal credit card practices, and more recently, the CFPB and OCC penalized $225 million in fines for “botching” the handling of unemployment benefits during the pandemic.
The bank’s competitor, Wells Fargo, has faced similar scrutiny and penalties by the CFPB. Late last year, Wells Fargo was ordered to repay $2 billion to consumers and was slapped with a whopping $1.7 billion fine, the largest financial penalty ever against a bank by the CFPB.
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The fine was levied over accusations that Wells Fargo charged customers illegal interest and fees on auto and home loans. The agency also said that Wells Fargo illegally repossessed the vehicles of some consumers and incorrectly applied overdraft fees on savings and checking accounts.
Wells Fargo is still struggling to recover from a scandal, first flagged by regulators in 2016, in which employees secretly created millions of bank and credit card accounts unbeknownst to the customers involved. The bank ended up firing thousands of employees during the fallout and reached a $3 billion settlement with the DOJ over the matter.