CFPB Takes Action: Protecting Consumers from Junk Fees
The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have ordered Bank of America to pay over $100 million in restitution to affected customers and $150 million in penalties. These actions come in response to Bank of America’s systematic imposition of junk fees on customers with insufficient funds, the withholding of promised credit card rewards, and the unauthorized opening of accounts using customers’ personal information. The CFPB and OCC have deemed these practices illegal and a violation of consumer trust.
The Impact of Bank of America’s Actions
As one of the largest banks in the United States, Bank of America serves millions of individuals and small businesses. However, over the course of several years and across multiple product lines and services, the bank has harmed hundreds of thousands of consumers. The specific actions that have been identified include:
- Double-dipping on fees: Bank of America implemented a scheme where customers were charged a $35 fee when a transaction was declined due to insufficient funds. The CFPB’s investigation revealed that the bank engaged in double-dipping by allowing multiple fees to be charged for the same transaction. This unethical practice resulted in significant additional revenue for the bank.
- Withholding credit card rewards: In an effort to compete with other credit card companies, Bank of America enticed individuals with special offers of cash and points when signing up for a credit card. However, the bank failed to fulfill its promise of providing these rewards to tens of thousands of consumers. The denial of rewards was attributed to the bank’s flawed business processes and systems.
- Opening unauthorized accounts: Bank of America employees, in an attempt to meet sales-based incentive goals, opened credit card accounts without the knowledge or authorization of consumers. This was done by misusing or obtaining consumers’ credit reports without their consent. As a result, consumers incurred unjustified fees, experienced negative impacts on their credit profiles, and had to invest time in rectifying the situation.
Addressing Bank of America’s Illegally Charging Junk Fees
The CFPB and OCC have taken action to rectify the harm caused by Bank of America. The penalties imposed on the bank include $90 million payable to the CFPB and $60 million payable to the OCC. These penalties serve as a consequence of the illegal double-dipping on fees. Additionally, Bank of America is required to compensate affected consumers, amounting to approximately $80.4 million in consumer redress.
To prevent further misconduct, Bank of America must cease opening unauthorized accounts and adhere to strict guidelines regarding the disclosure of material limitations on rewards card bonuses. The bank is also prohibited from charging repeat non-sufficient funds fees in the future. These measures aim to protect consumers and restore trust in the banking system.
Bank of America’s History of Illegal Practices
This is not the first time Bank of America has faced enforcement actions for its illegal activities in the consumer business. In previous instances, the CFPB has ordered the bank to pay substantial amounts in redress to victims of illegal credit card practices and unlawful garnishments. The bank’s repeated violations demonstrate the need for stricter oversight and accountability in the financial industry.
Upholding Consumer Rights
The CFPB’s actions against Bank of America reaffirmed its commitment to protecting consumers from unfair and deceptive practices. By holding financial institutions accountable, the CFPB aims to restore consumer trust and ensure that banks prioritize the best interests of their customers. It is crucial for all consumers to be aware of their rights and to report any suspicious or unethical behavior by financial institutions. Together, we can foster a more transparent and accountable banking system that serves the needs of individuals and communities.