Bank of America Faces $250 Million Punishment for Fake Accounts and Junk Fees
The Consumer Financial Protection Bureau ordered Bank of America this week to pay over $250 million in fines and restitution for allegedly opening fake accounts, withholding credit card rewards from thousands of customers and charging illegal junk fees.
The bank will pay more than $100 million to consumers — details haven’t been announced — and $150 million in penalties to the CFPB and the Office of the Comptroller of the Currency.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees and opened accounts without consent,” said CFPB Director Rohit Chopra in a statement on Tuesday. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Bank of America is the second largest bank in the United States, serving 68 million customers and small businesses. It also came in at No. 6 on our list of the worst banks in the country for its sheer number of customer complaints.
The CFPB is accusing Bank of America of the following.
- Double-dipping scheme: Bank of America charged customers $35 for insufficient funds, but the investigation by the CFPB shows the bank often charged these fees repeatedly for the same declined transaction. From September 2018 through February 2022, Bank of America generated hundreds of millions of dollars in junk fees, according to the CFPB.
- Withheld credit card rewards: Bank of America failed to provide cash and points rewards promised to tens of thousands of consumers who signed up for credit cards.
- Unauthorized accounts: Bank of America employees illegally enrolled customers in credit card accounts without their knowledge, misusing sensitive consumer information obtained from credit reports. This led to illegal fees and negative effects on people’s credit reports.
Federal officials have been cracking down on illegal junk fees over the last year. In March, the CFPB issued a sweeping report on the widespread practice, and President Joe Biden even called for a crackdown on junk fees during his State of the Union address in February.
This isn’t the first time Bank of America has come under fire from the CFPB, either.
Back in 2014, the CFPB ordered Bank of America to pay $727 million in restitution to victims affected by unlawful credit card practices. More recently, in June 2022, the CFPB and the Office of the Comptroller of the Currency fined Bank of America $225 million and required it to pay hundreds of millions of dollars to consumers for bungling the pay out of state unemployment benefits during the pandemic.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer at The Penny Hoarder. She focuses on investing, retirement, taxes and life insurance.