Bank of America Settles $250 Million Penalty for Unfair Fees, Credit Card Fraud, and Unauthorized Account Openings

Bank of America Slapped with $250 Million Fine for Illegal Practices Targeting Customers.

One of the largest banks in the United States has recently reached an agreement to pay a hefty $250 million fine following allegations of engaging in a series of illegal practices that adversely affected its customers. This move comes as a response to investigations conducted by both the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).

According to the findings presented by the CFPB and OCC, Bank of America was found guilty of imposing hidden fees, withholding credit card rewards, and even surreptitiously opening unauthorized accounts over an extended period of time. These actions were deemed to be in direct violation of established regulations and safeguards designed to protect consumers.

More specifically, the bank was penalized for its systematic practice of charging customers with insufficient funds in their accounts multiple fees, essentially “double-dipping” on these charges. Moreover, the bank was found guilty of reneging on reward bonuses that were explicitly promised to credit card holders. Additionally, the bank was discovered to have misused sensitive personal information, using it to open accounts without the customers’ knowledge or consent.

In order to rectify the harm caused, Bank of America will be making direct payments totaling $100 million to the affected account holders. Furthermore, the bank will be subjected to an additional $90 million in penalties by the CFPB, as well as $60 million in penalties imposed by the OCC.

Rohit Chopra, the Director of the CFPB, emphasized the agency’s dedication to combating widespread illegal practices within the banking sector. He expressed concern over Bank of America’s wrongful actions, including the withholding of credit card rewards, the manipulation of fees, and the unauthorized account openings. These illicit practices not only breach the law but also erode the trust customers place in financial institutions. The CFPB aims to put an end to such systemic misconduct throughout the banking industry.

Unfortunately, this is not the first instance where Bank of America has faced legal consequences for its unlawful behavior in its consumer business. Back in 2014, the CFPB compelled the bank to pay $727 million to victims of illegal credit card practices. In 2015, the same agency imposed a $10 million civil penalty on the bank due to unlawful garnishments. Moreover, in 2022, the CFPB and OCC fined Bank of America an additional $225 million for mishandling the disbursement of state unemployment benefits, which occurred two years prior.

While the fines imposed on Bank of America are significant, they pale in comparison to the bank’s staggering profits. According to Statista, the bank reported an annual gross profit of $94.95 billion in 2022, marking a notable 6.55% increase from the previous year.

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