![[US] Bank of America to pay $250m over fake accounts and junk fees](http://gpa.net/cdn/shop/articles/bigstock-Miami-Florida-Usa--March---476579377_1200x.jpg?v=1689143577)
On July 11, Bank of America agreed to pay $250 million in fines and compensation to settle claims that it had systematically double-charged customers fees, withheld promised credit card perks and opened accounts without customer authorisation, New York Post reports.
Bank of America agreed to pay $100 million in restitution to harmed consumers and another $150 in civil penalties following the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency stating that the bank violated a number of laws beginning in 2012.
The CFPB said in a statement that Bank of America had raked in hundreds of millions of dollars by charging multiple fees to customers who did not have enough funds in their accounts from February 2018 until February 2022.
Consumers could not reasonably expect or understand that they would incur $35 fees each time the bank declined to pay a single transaction, regulators said.
In a statement, Charlotte, NC-based Bank of America - headed by CEO Brian Moynihan - said it voluntarily eliminated or reduced a range of fees last year.
The CFPB has reportedly launched a crackdown on a range of “junk fees,” including overdraft and non-sufficient fund fees. The bureau says lenders unfairly charge customers for banking services.
In a statement, Rohit Chopra - CFPB director - said, “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Under pressure to achieve sales pressure or motivated by rewards, Bank of America employees illegally applied for and enrolled consumers in credit card accounts from at least 2012 without their knowledge, the CFPB said.
According to regulators, the accounts represented a “small percentage” of new accounts at the bank.
In addition, the bank failed to make good on cash rewards and bonus points promised to tens of thousands of credit card customers, according to the CFPB.
The bank agreed to update regulators on its compliance progress in a year on top of its agreement to pay penalties of $90 million to the CFPB and $60 million to the OCC.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry-leading changes, revenue from these fees has dropped more than 90 per cent,” it said in a statement.
Bank of America’s financial advisory arm Merrill Lynch, Pierce, Fenner & Smith has reportedly entered into a separate agreement to pay $12 million in penalties to the Securities and Exchange Commission and Financial Industry Regulatory Authority for failing to file hundreds of suspicious activity reports to regulators from January 2009 to November 2019.
According to the SEC’s order, Merrill discovered the issue in 2019 and later told regulators.
Source: New York Post
(Link and quotes via original reporting)
On July 11, Bank of America agreed to pay $250 million in fines and compensation to settle claims that it had systematically double-charged customers fees, withheld promised credit card perks and opened accounts without customer authorisation, New York Post reports.
Bank of America agreed to pay $100 million in restitution to harmed consumers and another $150 in civil penalties following the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency stating that the bank violated a number of laws beginning in 2012.
The CFPB said in a statement that Bank of America had raked in hundreds of millions of dollars by charging multiple fees to customers who did not have enough funds in their accounts from February 2018 until February 2022.
Consumers could not reasonably expect or understand that they would incur $35 fees each time the bank declined to pay a single transaction, regulators said.
In a statement, Charlotte, NC-based Bank of America - headed by CEO Brian Moynihan - said it voluntarily eliminated or reduced a range of fees last year.
The CFPB has reportedly launched a crackdown on a range of “junk fees,” including overdraft and non-sufficient fund fees. The bureau says lenders unfairly charge customers for banking services.
In a statement, Rohit Chopra - CFPB director - said, “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Under pressure to achieve sales pressure or motivated by rewards, Bank of America employees illegally applied for and enrolled consumers in credit card accounts from at least 2012 without their knowledge, the CFPB said.
According to regulators, the accounts represented a “small percentage” of new accounts at the bank.
In addition, the bank failed to make good on cash rewards and bonus points promised to tens of thousands of credit card customers, according to the CFPB.
The bank agreed to update regulators on its compliance progress in a year on top of its agreement to pay penalties of $90 million to the CFPB and $60 million to the OCC.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry-leading changes, revenue from these fees has dropped more than 90 per cent,” it said in a statement.
Bank of America’s financial advisory arm Merrill Lynch, Pierce, Fenner & Smith has reportedly entered into a separate agreement to pay $12 million in penalties to the Securities and Exchange Commission and Financial Industry Regulatory Authority for failing to file hundreds of suspicious activity reports to regulators from January 2009 to November 2019.
According to the SEC’s order, Merrill discovered the issue in 2019 and later told regulators.
Source: New York Post
(Link and quotes via original reporting)
