Bank of America recently was ordered to pay more than $100 million to customers for practices deemed illegal by the Consumer Financial Protection Bureau. This banking titan is being called into account for systematic double-dipping on fees assessed to customers with insufficient account funds, withholding credit-card reward bonuses and misusing sensitive personal information to open accounts unbeknownst to customers.
“These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system," Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a press release on July 11, the same day the order hit Bank of America.
Additionally, the bank has been faulted for engaging in the illegal practice of collecting fees twice, according to the Office of the Comptroller of the Currency in the release. As a result of these findings, Bank of America will forfeit a total of $60 million to the OCC and $90 million to the CFPB.
One of the biggest consumer financial services providers in the nation, Bank of America provides banking services to 68 million individuals and small businesses globally. The bank was the second-largest in the United States as of March with $2.4 trillion in consolidated assets and $1.9 trillion in domestic deposits.
As a giant in the financial industry, Bank of America is accused of harming hundreds of thousands of customers with these practices over the years and with a variety of product lines and services, according to a release. In particular, Bank of America is accused of using a double-dipping tactic to collect trash fees. The financial institution made it a rule to charge clients $35 when the bank turned down a transaction because of insufficient customer funds.
According to the CFPB's investigation, Bank of America engaged in double-dipping by permitting fees to be applied multiple times to the same transaction, the release said. Since this practice went on for years, Bank of America fraudulently collected multiple $35 fees, building a large increase in revenue, according to the release.
Credit-card customers also fell victim to improper charges, the release said, as it detailed the bank's withholding of cash and points rewards promised card holders. Specifically, the bank drew customers with unique offers of cash and points to stay competitive with financing rivals. This practice impacted tens of thousands of customers with the loss of cash rewards of bonus points, the release said.
Customers who applied in person or by phone reported that the bank broke its commitments to them impacting their rewards, according to the release. Refusing to give customers sign-up bonuses was yet another problem experienced by card holders.
