Bank of America Ordered to Pay $250 Million Over Wrongful Fees, Fake Accounts

livemint.com:

Federal regulators hit Bank of America with a $250 million penalty for opening credit-card accounts in customers’ names without their consent and double-charging fees. The Consumer Financial Protection Bureau said the bank opened credit-card accounts without permission from customers using credit reports it obtained illegally. Bank of America employees also improperly withheld credit-card rewards and charged overdraft fees several times for the same transactions, the CFPB and another regulator, the Office of the Comptroller of the Currency, said.

The penalty includes $100 million for harmed customers, $90 million for the CFPB and $60 million for the OCC. “These practices are illegal and undermine customer trust," CFPB Director Rohit Chopra said. “The CFPB will be putting an end to these practices across the banking system." The CFPB is trying to root out what its leadership calls “junk fees" that banks charge to their customers.

Chopra, who was appointed to run the CFPB by President Biden, has publicly pushed banks to scale back overdraft fees and other charges. Industry groups have said his agenda ignores the work that banks were already doing to help struggling customers. Bank of America previously had a policy of charging customers $35 after the bank declined a transaction because the customer didn’t have enough funds in their account.

For years, though, the bank “double-dipped" by charging the fee again if the merchant tried another time to charge the transaction, the CFPB said. Between 2018 and 2022, the bank earned hundreds of millions of dollars from these fees, the CFPB said. The CFPB said the bank must return some $80 million that it hasn’t yet refunded to customers.