Bank of America Blamed for Unlawful Practices and Fined Huge number of Dollars

Bank of America, one of the largest banking institutions in the United States, is facing significant scrutiny and financial penalties after federal regulators accused the bank of engaging in a series of illegal practices that harmed its customers. The Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have imposed substantial fines on Bank of America and mandated restitution for affected customers.

These allegations bear striking similarities to the scandal that unfolded at Wells Fargo several years ago when it was revealed that the bank had opened millions of unauthorized accounts. Bank of America is now facing charges of double-charging fees, wrongfully withholding credit card rewards, and engaging in the opening of fraudulent accounts.

The CFPB has accused Bank of America of harming hundreds of thousands of consumers over an extended period, across multiple product lines and services. One of the practices highlighted by the regulators is the repeated charging of fees for transactions that were initially rejected due to insufficient funds. In these cases, if a transaction was declined, but then subsequently resubmitted by the merchant, the bank would charge additional fees for insufficient funds or overdrafts, resulting in customers being charged multiple fees for the same transaction. This practice led to the accumulation of tens of millions of dollars in fees for the bank.

Furthermore, Bank of America has been accused of unlawfully withholding promised bonuses from tens of thousands of customers who signed up for new credit cards. These bonuses typically included cash rewards and reward points. The bank is also facing allegations that its employees, since at least 2012, opened credit card accounts without the knowledge or consent of customers. These accounts were reportedly opened to meet sales targets and improve employee performance evaluations. This practice involved accessing and utilizing customers' credit reports without their permission, leading to unjustified fees, negative impacts on credit scores, and customer efforts to rectify the bank's errors.

In response to these allegations, the CFPB has ordered Bank of America to pay over $100 million in restitution to affected customers, in addition to imposing a fine of $90 million. The OCC has also imposed a fine of $60 million on the bank. Collectively, Bank of America will be required to pay more than $250 million in compensatory payments and penalties as a result of these infractions.

It is worth noting that this is not the first time Bank of America has faced regulatory penalties. In 2014, the bank was ordered to pay $727 million in consumer compensations for illegal practices related to credit cards. Additionally, last year, the bank was fined $10 million for improper foreclosures and was required to pay $225 million to consumers for mishandling state unemployment benefits during the height of the coronavirus pandemic.

The substantial fines and the allegations of illegal practices have raised concerns and eroded customer trust in Bank of America. It is anticipated that these regulatory actions will exert significant pressure on the bank to rectify its internal practices and implement more robust consumer protection measures. The enforcement actions serve as a stark reminder to the banking industry as a whole that unethical and harmful practices will not be tolerated and that the well-being and rights of consumers must be safeguarded.