In a recent crackdown on exploitative banking practices, Bank of America has been hit with a $250 million fine. Federal regulators have accused the bank of executing dubious maneuvers like double-charging customers fees, opening unauthorized accounts, and withholding promised credit card perks.
The penalties imposed include $100 million in restitution to affected consumers, a $90 million penalty levied by the Consumer Financial Protection Bureau (CFPB), and a $60 million fine handed down by the Office of the Comptroller of the Currency. The decision, announced Tuesday, marks a continuation of an intensifying regulatory campaign against dubious banking practices.
The Charlotte, North Carolina-based bank has been found to have systematically exploited customers by overcharging fees and violating a series of laws dating back to 2012. From February 2018 until February 2022, Bank of America purportedly gained hundreds of millions of dollars by repeatedly charging multiple fees to customers with insufficient funds in their accounts.
Despite the bank’s claims that it voluntarily reduced or eliminated a range of fees in 2021, regulators assert that consumers could not reasonably anticipate or comprehend the imposition of $35 fees each time a single transaction was declined.
The unauthorized opening of credit card accounts was also flagged as a significant violation. The CFPB reported that under sales pressure or in pursuit of rewards, Bank of America employees illegitimately applied for and enrolled customers into credit card accounts, unbeknownst to them, beginning in 2012. While this represented a “small percentage” of new accounts, the revelation underlines the gravity of the bank’s transgressions.
In addition to the charges, Bank of America allegedly defaulted on delivering cash rewards and bonus points promised to tens of thousands of its credit card customers. The repercussions of this widespread misconduct are set to reverberate throughout the banking sector as regulatory bodies vow to stamp out such illicit practices.
“These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system,” said CFPB director Rohit Chopra in a statement.
These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system
Rohit Chopra, CFPB director
The repercussions of this scandal resonate deeply with customers. Public reactions have ranged from indignation over fraudulent fees to concerns about banking malpractices reminiscent of the infamous Wells Fargo scandal. The revelations have raised fundamental questions about accountability and business ethics in the banking sector.
Despite the fines and impending restitution payments, the bank maintains its defensive stance. “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 percent,” Bank of America said in a statement.
As part of the settlement, the bank has agreed to provide regulators with updates on its compliance progress in a year.
However, with the fine making significant waves in the financial sector, one thing is certain: Bank of America’s actions are likely to have far-reaching implications not only for the bank but also for the wider banking industry. In the wake of this scandal, the push for transparency, accountability, and customer-oriented banking reforms is expected to gain momentum.
Despite featuring hundreds of agencies and tens of thousands of regulators the fiat-military-government-banking complex struggles to “protect” consumers from the most basic forms of big-corporate malfeasance.
