Bank of America (BAC) is paying $250 million after regulators concluded the giant lender “double-dipped” on overdraft fees and opened accounts for customers without their consent.
Harmed consumers will get $100 million and another $150 million will go to the Consumer Financial Protection Bureau (CFPB) and the Comptroller of the Currency (OCC).
The nation’s-largest bank once charged consumers a $35 fee when they authorized a transaction from their accounts that lacked sufficient funds. The CFPB said Bank of America “double-dipped” by charging consumers a fee each time those transactions were re-attempted by merchants.
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For multiple years starting in September 2018, it made hundreds of millions of dollars in such fees. The OCC also called out Bank of America for the same double-dipping practice.
“Consumers could not reasonably understand that they could be assessed a new $35 fee each time,” the CFPB said in its order. Even when consumers did understand they were charged for each new transaction, “they still could not reasonably avoid them or otherwise protect their interest,” the regulator added.
Beginning in January of last year, Bank of America said it eliminated all non-sufficient fund fees.
“As a result of these industry leading changes, revenue from these fees has dropped more than 90 percent,” a Bank of America spokesman said.
The CFPB said the bank also withheld credit card rewards and opened accounts for customers without their consent since 2012.
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The bank is paying a $30 million fee for “opening unauthorized consumer financial accounts and its misleading statements regarding certain credit cards rewards,” according to another CFPB order filed Tuesday.
From at least 2012, the bank’s employees illegally applied for and enrolled consumers in credit card accounts without their knowledge, the regulator said.
The CFPB also found the lender advertised credit card rewards on its website and later denied bonuses to consumers who applied over the phone or in person.
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