Bank of America (BofA) agreed on Tuesday to pay $250 million worth of fines and compensation to settle claims it systematically charged customers fees, withheld promised credit card perks, and opened accounts without authorisation.
BofA agreed to pay $100 million in restitution to harmed consumers and $150 million in civil penalties, following the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) saying the bank had violated laws since 2012.
“Bank of America has reaped hundreds of millions of dollars by charging multiple fees to customers who did not have enough funds in their accounts from February 2018 to February 2022,” said the CFPB in a statement.
BofA employees illegally applied and enrolled consumers in credit card accounts in 2012 without their consent, the accounts represented a small percentage of new accounts at the bank, said regulators.
The CFPB has launched a crackdown on junk fees, including overdraft and non-sufficient fund fees, that banks unfairly charge consumers for banking services.
“These practises are illegal and undermine customer trust. The CFPB will be putting an end to these practises across the banking system,” CFPB director Rohit Chopra said in a statement.
BofA also failed to make good on cash rewards and bonus points promised to tens of thousands of credit card customers, the CFPB added.
“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,” said BofA in a statement.
BofA’s financial advisory arm, Merrill Lynch, Pierce, Fenner & Smith, agreed to pay $12 million in penalties to the US Securities and Exchange Commission and Financial Industry Regulatory Authority for failing to file suspicious activity reports with regulators.
