Bank of America to Pay $250 Million Over Fake Accounts, Withholding Rewards

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Bank of America to Pay $250 Million Over Fake Accounts, Withholding Rewards

The Consumer Financial Protection Bureau has agreed to restitution efforts by the Bank of America to the tune of $250 million.

Bank of America was accused of withholding rewards and double-dipping on fees against customers with insufficient funds. Worse of all, BoA employees used customers’ personal information to improperly open accounts in their name, impacting their credit scores.

“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.”

Per the agreement with the CFPB, BoA will pay customers more than $100 million. In addition, the bank will pay “$90 million in penalties to the CFPB and $60 million in penalties to the OCC.”

The CFPB points out that this is not the first time regulators have had to take action against BoA for illegal behavior:

This is not the first enforcement action Bank of America has faced for illegal activity in its consumer business. In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices. In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty over unlawful garnishments and, later in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay hundreds of millions of dollars in redress to consumers for botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.

In view of its history, one of the main criteria of the agreement is that BoA ceases its repeated illegal behavior:

Stop its repeat offenses: Under the terms of today’s orders, Bank of America must stop opening unauthorized accounts, and the bank must disclose material limitations on any rewards cards bonuses and provide bonuses as advertised. Additionally, while Bank of America has generally reduced its reliance on junk fees, the bank is also strictly prohibited from charging repeat non-sufficient funds fees in the future.

Only time will tell if BoA lives up the CFPB’s mandate.

Bank of America to Pay $250 Million Over Fake Accounts, Withholding Rewards
Matt Milano

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