Penalties and Restitution
According to the Consumer Financial Protection Bureau (CFPB), Bank of America will pay $90 million in penalties to the bureau and an additional $60 million in penalties to the Office of the Comptroller of the Currency. The CFPB has also ordered the bank to reimburse affected consumers with over $100 million, including $23 million that has already been paid to customers who were denied rewards bonuses on their credit cards.
The CFPB Director, Rohit Chopra, condemned Bank of America’s actions, stating that the bank wrongfully held back credit card rewards, imposed excessive fees, and opened accounts without obtaining customer consent. Chopra emphasized that such practices are not only illegal but also erode customer trust.
Bank of America’s Response
In response to the allegations, Bank of America issued a statement explaining that they voluntarily reduced overdraft fees and completely eliminated non-sufficient fund fees during the first half of 2022. Consequently, revenue from these fees has dropped by more than 90 percent.
The CFPB revealed that Bank of America had generated substantial additional revenue from unlawful fees over a span of several years. Specifically, the bank would frequently charge customers $35 for insufficient fund fees on a single transaction. Regulators have criticized these excessive charges, commonly referred to as “junk fees.” In response, Bank of America announced in the previous year that it had eliminated insufficient fund fees and significantly reduced its overdraft fee from $35 to $10.
Consequences for Customers
Despite these serious allegations, Bank of America’s shares experienced minimal change on Tuesday morning, with only a marginal increase of 0.1%.