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Federal regulators are penalizing Bank of America to the tune of $250 million for allegedly taking advantage of customers.
The Consumer Financial Protection Bureau announced Tuesday that the bank will pay over $100 million to the consumers who were adversely impacted and another $150 million in penalties to the CFPB and the Office of the Comptroller of the Currency.
The bank has been accused of "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."
CFPB director Rohit Chopra said in a statement, "These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system."
The OCC similarly determined that the bank's double-dipping on fees was illegal.
As a result, the bank is required to pay $90 million in penalties to the CFPB and another $60 million to the OCC.
Bank of America had a policy whereby customers would be hit with a $35 charge if they had a transaction declined on account of insufficient funds in their account. With the alleged objective of harvesting junk fees, the bank would allow fees to be repeatedly charged for the same interactions and did so over a period of multiple years, according to the CFPB.
While allegedly double-dipping, the bank has also been accused of signing up tens of thousands of customers on false promises of cash rewards and points, then failing to follow through.
The CFPB's and OCC's penalties also reflect an alleged long-standing scheme undertaken by Bank of America employees that damaged customers' credit scores.
Since 2012, employees seeking to cut corners in order to hit incentive goals and satisfy evaluation criteria are said to have illegally used consumers' credit reports without their consent to apply for and enroll in credit card accounts. Although the bank employees appear to have benefited, the customers whose information was illegally used without their knowledge "were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors."
Axios reported that while ostensibly different in scope, the details of this scandal are reminiscent of what Wells Faro was accused of in 2016.
Wells Fargo ended up agreeing in February 2020 to pay a $3 billion fine to settle the resultant civil lawsuit and to resolve a criminal prosecution filed by the Department of Justice, after it was discovered that bank employees opened millions of savings and checking accounts in the names of extant customers without their consent, reported NBC News.
The CFPB stressed that Bank of America has a long history of ripping off customers, having been forced to cough up $727 million to its victims for illegal credit card practices in 2014 and a fine of $225 million last year for "wrongfully freezing accounts" at the height of the pandemic.
This time around, Bank of America has been ordered to compensate the victims of the "unlawful non-sufficient fund fees who have not already been made whole by the bank." This approximate total is $80.4 million in consumer redress.
Customers owed bonuses who have not yet been compensated will similarly be made whole.
A CFPB spokesman told MarketWatch that customers affected by these alleged abuses don't have to do anything to get what's owed them.
"Depending on the circumstances of the consumer, Bank of America will deposit funds into the consumer's deposit account or will send the consumer a check," said the spokesman.
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Joseph MacKinnon is a staff writer for Blaze News.