Bank of America will pay over $100 million to harmed consumers and $150 million in penalties to regulators over a series of breaches related to fees, credit card rewards, and unauthorized accounts.
The bank has been censured by the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) for charging “junk fees” among other practices. The CFPB is currently undertaking a wider crackdown on junk fees on bank accounts.
The CFPB found that Bank of America was “systematically double-dipping on fees” levied when a customer had insufficient funds in their account.
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 allowed 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,” the CFPB said in a statement.
The OCC said the bank’s practice of imposing multiple fees on customers with insufficient funds violated Section 5 of the Federal Trade Commission Act.
It said that Bank of America’s disclosures did not clearly explain this practice, and added that customers could not avoid the fees as they had no way of knowing when or if a merchant would resubmit a transaction.
The bank also withheld credit card rewards and misused sensitive information to open unauthorized accounts, the CFPB found.
As a result, the bank will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC, as well as $100 million in payments to affected customers.
In a statement to Reuters, Bank of America said it voluntarily eliminated or reduced a range of fees last year. It said: “We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent.”
A year ago, Bank of America was fined $225 million by the same two regulators “violations of law and unsafe or unsound practices” under the bank’s Unemployment Benefits Prepaid Card Program as well as other shortcomings.