In the United States, the Consumer Financial Protection Bureau (CFPB) has imposed an obligation on Bank of America to pay more than $250 million in fines and damages to customers.
The press release of the bureau, which was published on Tuesday, July 11, contains information that the decision is a response to the practice of a financial institution for double understatement of fees that were charged from clients with insufficient funds. The regulator notes that these actions of the bank were systematic. The bureau also emphasizes that the financial institution did not pay the rewarding bonuses promised to customers on credit cards. Another claim against the bank by the CFPB is the practice of unauthorized opening of accounts with confidential data of consumers of this lender’s services.
The director of the bureau, Rohit Chopra, said that the actions of the financial institution belong to the category of illegal practices and contribute to a decrease in the level of customer confidence. He also announced the CFPB’s intention to stop such activities in the entire banking sector.
A representative of Bank of America, in response to a media request for comments on the regulator’s decision, said that the lender no longer charges fees that caused claims from the bureau. He stated that the financial institution on a voluntary basis reduced overdraft fees and stopped the practice of charging money for insufficient funds in the first half of 2022. The representative of the bank also stressed that as a result of the measures taken, revenue from fees decreased by more than 90%.
The lender in January 2022 reported that changes in the organization’s policy regarding the practice of charging money from customers began back in 2010. The first innovations in relation to this aspect of the bank’s activities provided for the cancellation of commissions and the introduction of overdraft protection.
The CFPB press release contains information that Bank of America was fined $90 million in favor of the regulator and $60 million in favor of the Office of the Comptroller of the Currency (OCC). Also, the financial institution received an order to pay customers more than $100 million.
The CFPB revealed that Bank of America charged consumers $35 for rejected transactions due to lack of funds. This was followed by the practice of double reduction of fees, which were charged repeatedly for the same financial operations. This information is contained in the press release of the regulator.
Also, during the investigation, the CFPB found that tens of thousands of financial institution customers were denied promised credit card bonuses, including cash rewards and points. The regulator emphasizes that these refusals were recorded even in cases when the situation and actions of consumers fully complied with the bank’s requirements for receiving remuneration.
The investigation also revealed that Bank of America employees opened unauthorized accounts to stimulate sales, which have since been canceled.
The terms of the CFPB order also require that the financial institution cease the practice of illegally opening accounts and disclose information about restrictions on receiving bonuses.
In May, the bureau reported that the income of American lenders from overdraft fees fell by about 48% in the fourth quarter of 2022 compared to the same period in 2019. The reason for the decline is the cancellation of these fees by the largest US financial institutions.
As we have reported earlier, CFPB Warns Banks Against Creation of Fake Accounts for Fee Harvesting.
