Bank of America has agreed to pay back hundreds of thousands of customers after being accused of double-dipping on fees, withholding promised credit card rewards and misappropriating customer information to open fake accounts.
On Tuesday, the Consumer Financial Protection Bureau (CFPB) ordered the nation's second-largest bank to pay more than $100 million to customers for allegedly charging fees repeatedly on the same transaction, failing to honor special offers and rewards, and enrolling consumers in credit cards without their knowledge or authorization to meet sales-based incentive goals.
CFPB Director Rohit Chopra slammed Bank of America for its alleged "illegal" practices, emphasizing that those actions "undermine customer trust" in the banking system.
The global bank serves 68 million people and small-business clients and offers extensive consumer financial services in the U.S.
As part of Tuesday's announcement, the CFPB ordered Bank of America to stop its repeated offenses and also to "compensate consumers charged unlawful non-sufficient funds fees and who have not already been made whole by the bank."
The bureau estimates that the bank owes a total of approximately $80.4 billion for the double-dipping on fees.
In a statement shared with Newsweek, a bank spokesperson said, "We voluntarily reduced overdraft fees and eliminated all nonsufficient 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."
The spokesperson noted that the fees in question are no longer charged by the bank.
CFPB also ordered Bank of America to pay back consumers who incurred costs from new credit card accounts that were opened without their authorization and to compensate customers who were denied reward bonuses that were promised. The bank has already paid around $23 million to customers who were harmed by the withholding of credit card bonuses.
CFPB told Newsweek that eligible consumers do not have to do anything to receive their compensation. Depending on the circumstances, Bank of America will either deposit funds into customers' accounts or send them a check. The bureau added that all customers affected by the missing credit card rewards were already paid.
Bank of America confirmed to Newsweek that the bank will identify and directly contact customers eligible for compensation. The bank will identify a point of contact for consumer inquiries later this month.
Bank of America was also ordered to pay $90 million in penalties to the CFPB and $60 million to the Office of the Comptroller of the Currency, which found the bank's double-dipping on fees to be illegal. The CFPB penalties will be deposited in the bureau's Civil Penalty Fund, which is used to compensate consumers who "were harmed by a violation for which civil penalties were imposed, and who aren't otherwise expected to get full compensation for their compensable harm."
This is not the first enforcement action taken against Bank of America.
In 2014, the CFPB ordered the bank to pay $727 million to customers who were the target of illegal credit card practices. In May 2022, the bureau ordered Bank of America to pay a $10 million civil penalty for processing illegal, out-of-state garnishment orders against its customers' bank accounts. And two months later, the CFPB hit the bank again, with a $225 million fine for botching the disbursement of state unemployment benefits during the COVID pandemic.
Update 7/11/23, 4:09 p.m. ET: This story was updated with comments from the Consumer Financial Protection Bureau.
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