The second-largest bank in the United States was ordered to pay millions of dollars in fines to the federal government after it was found to have overcharged customers through the use of so-called “junk fees.”
The Consumer Financial Protection Bureau announced Tuesday that Bank of America utilized a double-dipping scheme against its customers, charging them $35 if they overdrew on their account on a purchase and imposing that fee multiple times on the same transaction. The bank also was found to have lured new customers through promises of additional points or cash bonuses, only to later withhold them. The CFPB said Bank of America also completed applications and signed up consumers for credit card accounts without their consent in order to reach sales goals and, in doing so, “illegally used or obtained consumers’ credit reports, without their permission, to complete applications.”
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
The bank is being ordered to compensate consumers who were affected by the fraudulent charges, a total that the CFPB estimates to be about $80.4 million. It will have to pay for any additional costs charged to consumers from the accounts wrongfully opened in their names. Bank of America will have to pay $90 million in fines to the CFPB for the junk fees, illegal accounts, and withheld card bonuses, funds that will go into the agency’s civil penalty fund. The bank also owes $60 million to the Office of the Comptroller of the Currency, an independent agency within the Treasury Department that oversees the nation’s banks.
A Bank of America spokesman told The Wall Street Journal that the bank had lowered its overdraft fee from $35 to $10 last year. “As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent,” they said in a statement.