Bank of America has agreed to pay over $250 million over junk fees and other issues. The country’s second-largest bank will pay a total of $100 million in restitution to harmed consumers and another $150 million in civil penalties after the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) accused it of illegally double-charging customers on overdraft fees, withholding promised credit card perks and opening accounts without customer authorization. Over these deceptive practices it’s one of the most significant financial penalties in years against a central US bank.
The $3.2 trillion bank will also stop charging multiple overdraft fees in a single transaction, the CFPB said. The regulator added that it must refund customers who were unfairly charged these fees and accurately market credit card bonuses. It also must stop unauthorizedly accessing personal information to open and use credit cards in people’s names, which the CFPB said: “harms tens of thousands of consumers every year.”
In some cases, Bank of America employees opened or enrolled a consumer in a credit card account without their consent as part of an incentive program linked to sales-based goals, the CFPB said. The agency said this practice violated various consumer laws, including the Truth in Lending Act and Fair Credit Reporting Act.
Consumer advocates applauded the CFPB action but warned that other banks would likely follow suit in slashing overdrafts and other fees. According to experts, as the CFPB and the Biden administration push to rein in these kinds of bank fees, it may become increasingly difficult for them to raise revenue this way.
The CFPB’s actions against Bank of America are part of a larger crackdown on so-called junk fees, which have increased since the Great Recession. The federal regulator recently fined Wells Fargo a record $3.7 billion over such fees and ordered Regions Bank to pay $50 million into a victims’ relief fund after it was found to have overcharged customers $141 million in overdraft and other fees.
Several states have passed laws in recent years to restrict the fees banks can charge, and some have even prohibited them altogether. However, these state-level laws only apply to some of the nation’s largest banks, which must abide by federal rules and regulations set by the CFPB.
Besides the hefty overdraft fee fine, the CFPB slapped Bank of America with two other penalties in 2022 totaling $235 million: a $10 million civil penalty for unlawfully processing out-of-state garnishments against customer bank accounts and a $225 million fine for “botching” state unemployment benefits disbursements during the COVID-19 pandemic. In a statement, a bank spokesperson told Quartz that the company “voluntarily reduced overdraft fees and eliminated non-sufficient funds fees in the first half of 2022,” which resulted in a 90% decrease in revenue from those fees. The company did not admit to any wrongdoing in the settlement with the CFPB and OCC.
