Bank of America fined $250 MILLION for illegally charging junk fees and opening bogus accounts

Bank of America must pay $250 million for illegally charging junk fees, withholding credit card rewards and opening fake accounts.

The Consumer Financial Protection Bureau (CFPB) accused the bank of harming hundreds of thousands of customers by systematically doubling fees for account holders with insufficient funds.

The watchdog has ordered the bank to pay more than $100 million to customers — and $150 million in fines to the CFPB and the Office of the Comptroller of the Currency (OCC).

Some of the allegations echo last decade’s Wells Fargo scandal, when the bank was ordered to pay $190 million after it was found that staff had given customers extra bank accounts and credit cards without their knowledge.

Earlier this year, the government pledged to crack down on sneaky junk charges that drive up prices and make it difficult for consumers to know exactly how much they’ll end up paying for a service. The White House estimates that these add-ons cost Americans about $65 billion annually.

“Bank of America improperly withheld credit card rewards, double charged and opened accounts without authorization,” said CFPB director Rohit Chopra.

These practices are illegal and undermine customer confidence. The CFPB will end these practices throughout the banking industry.”

Last year alone, consumers paid more than $7.7 billion in overdraft and insufficient fund fees in 2022, according to the CFPB. The federal regulator has proposed a rule to curb excessive fees for late credit card payments — which are estimated to cost credit card companies about $12 billion a year.

The watchdog accused Bank of America of employing 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 didn’t have enough money in their account,” the CFPB said in a statement.

The CFPB’s investigation found that Bank of America double-dip by allowing repeated charges for the same transaction. Over a period of several years, Bank of America generated substantial additional revenue by illegally charging several $35 fees.”

It also alleged that to compete with other credit card companies, Bank of America had targeted individuals with special offers of cash and points when signing up for a credit card.

It said the bank had illegally withheld bonuses promised on credit card accounts – such as cash rewards – from tens of thousands of customers. It also accuses the bank of failing to honor reward promises for consumers who submitted applications over the phone or in person.

The federal regulator also said the bank misused sensitive customer information to open accounts.

“From at least 2012, in order to achieve the now-resolved sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without the consumer’s knowledge or consent,” the CFPB said.

In those cases, Bank of America illegally used or obtained credit reports from consumers, without their consent, to fill applications.

“Bank of America’s actions have left consumers unduly charged, negatively impacted their credit profile, and forced them to spend time correcting errors.”

This is not the first time the watchdog has taken enforcement action against Bank of America.

In 2014, the CFPB ordered Bank of America to pay $727 million for illegal credit card practices. Last year it was ordered to pay a $10 million civil fine for unlawful garnishment.

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

Bank of America told DailyMail.com that the $35 overdraft fee was eliminated last year.

“We voluntarily reduced overdraft fees and eliminated all underfunding fees in the first half of 2022. As a result of these industry-leading changes, revenue from these costs has fallen by more than 90 percent,” a spokesperson said.