Bank of America fined $150 million for double-dipping on fees, withholding reward bonuses

Rick Steves

“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent. These practices are illegal and undermine customer trust.”

Bank of America

The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have ordered Bank of America to pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC.

The grand total of $150 million in penalties is the result of Bank of America systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.

BoA also to pay $100+ million to hundreds of thousands of harmed consumers

Bank of America was also ordered to pay more than $100 million to hundreds of thousands of consumers who were harmed over a period of several years and across multiple product lines and services.

CFPB Director Rohit Chopra said: “Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent. These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”

Bank of America serves 68 million people and small business clients, and has one of the largest coverages in consumer financial services in the country.

As of March 31, 2023, the bank had $2.4 trillion in consolidated assets and $1.9 trillion in domestic deposits, which makes it the second- largest bank in the United States.

The systematically important bank was found to have:

  • Deployed a double-dipping scheme to harvest junk fees: Bank of America had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The CFPB’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.
  • Withheld cash and points rewards on credit cards: To compete with other credit card companies, Bank of America targeted individuals with special offers of cash and points when signing up for a credit card. Bank of America illegally withheld promised credit card account bonuses, such as cash rewards or bonus points, to tens of thousands of consumers. The bank failed to honor rewards promises for consumers who submitted in-person or over-the-phone applications. The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.
  • Misused Sensitive Customer Information to Open Unauthorized Accounts: From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization. In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. 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.

Bank of America is a repeat offender

The CFPB and OCC have previously fined Bank of America for past malpractices.

In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices.

In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty over unlawful garnishments.

In later in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay hundreds of millions of dollars in redress to consumers for botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.

Bank of America violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Truth in Lending Act. The financial institution is being ordered to spot its repeat offences, pay redress to harmed consumers, pay $90 million in penalties to the CFPB ($60 million for charging repeat non-sufficient funds fees, and a $30 million for credit card rewards practices and for opening unauthorized accounts), and pay a $60 million to the OCC for its double-dipping fee practices.

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