The Consumer Financial Protection Bureau (CFPB) ordered Bank of America earlier today to pay over $250 million for unlawful practices, including “double-dipping” on overdraft fees, using customers’ information to open accounts without their knowledge since 2012, and failing to fulfill rewards bonuses that had been explicitly promised to individuals.
Bank of America is required to distribute $100 million to those affected. The corporation was additionally fined $90 million by the CFPB, and $60 million by the Office of the Comptroller of the Currency (OCC), which also found the bank’s actions to be illegal.
“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. “These practices are illegal and undermine customer trust.”
Any bank customer who was affected by these overdraft fees will be entitled to compensation. Bank of America previously charged customers $35 if they attempted to complete a transaction but did not have the funds necessary to do so in their account. The “double-dipping” occurred when the company allowed multiple fees to be charged for the same exchange.
This is not the first time that significant fines have been imposed on Bank of America. According to the Associated Press, the CFPB and OCC fined the bank $225 million in 2022 and required that hundreds of millions be paid to customers “for botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.”
Prior to that, Bank of America was required to pay $727 million for illegal credit card practices and $10 million for “unlawful garnishments” in 2014 and 2022, respectively. A garnishment means that a creditor has taken money from someone’s paycheck or bank account for the purpose of debt collection, according to the CFPB.
Bank of America also agreed to settle a class action lawsuit earlier this year that was related to the junk overdraft fees it was charging.
Reached for comment, Bank of America spokesperson Naomi Patton told Fast Company that the bank no longer charges the fee.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” she said via email. “As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent.”
Since 2010, the bank has taken steps to reduce charges against customers for overdrawing their bank accounts. These adjustments include eliminating non-sufficient-funds fees and the ability to max out an account at an ATM. Overdraft fees were also reduced from $35 to $15 in May 2022, according to Bank of America.
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