Bank of America (BAC.N) is to pay over $250 million as settlement amount over illegal fees, and other issues. On Tuesday, Bank of America agreed to pay $250 million in fines and compensation to settle claims that it charged illegal fees by systematically double charging customer’s fees, withheld promised credit card perks, and opened accounts without customer authorization.
Bank of America CFPB fine
There were allegations that Bank of America opened fake accounts and so the CFPB ordered Bank of America to pay over $250 million in settlement, withheld credit card rewards and Bank of America charged illegal fees or junk fees. This is latest Bank of America fee lawsuit, earlier it had paid millions in fines for illegal credit card practices.
Bank of America unauthorized accounts lawsuit was filed. Bank of America’s fines by CFBC were $100 million in restitution to harmed consumers and another $150 million in civil penalties after the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) said the Bank of America took wrongful fees and violated a number of laws beginning in 2012.
Bank of America fee lawsuit
Bank of America unauthorized accounts lawsuit stated Bank of America charged wrongful fees and reaped hundreds of millions of dollars. Bank of America was fined by CFPB, as per a statement by CFPB, multiple charging by Bank of America of illegal fees to customers who did not have enough funds in their accounts from February 2018 until February 2022. Consumers could not reasonably expect or understand they would be hit with $35 fees each time the bank declined to pay a single transaction, regulators said.
In the Bank of America fee lawsuit statement, it voluntarily eliminated or reduced a range of fees last year.
The CFPB has launched a Bank of America wrongful fees crackdown on a range of so-called “junk fees,” charged by Bank of America for fake accounts including overdraft and non-sufficient fund fees, it says lenders unfairly charge customers for banking services.
“These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system,” CFPB director Rohit Chopra said in a statement.
Bank of America fake accounts
Under sales pressure or seeking rewards, employees of Bank of America took illegal fees and enrolled consumers, without their knowledge, in credit card accounts from at least 2012, the CFPB said. The accounts represented a “small percentage” of new accounts at the bank, regulators said.
The bank, based in Charlotte, North Carolina, also failed to make good on cash rewards and bonus points promised to tens of thousands of credit card customers, according to the CFPB.
In addition to paying penalties of $90 million to the CFPB and $60 million to the OCC, the bank agreed to update regulators on its compliance progress in a year.
Democratic Senator Sherrod Brown described the case as an example of U.S. banks padding their profits with Americans’ money.
“This is just the latest in a long line of illustrations of why we can’t trust Wall Street to do the right thing,” he said.
Other than Bank of America illegal fees fine, separately, Bank of America’s financial advisory arm Merrill Lynch, Pierce, Fenner & Smith agreed to pay $12 million in penalties to the U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority for failing to file hundreds of suspicious activity reports to regulators from January 2009 to November 2019.
Merrill discovered the issue in 2019, according to the SEC’s order.
Stock update
Bank of America shares were up 1.1% by 2:02 p.m. ET (1802 GMT), recovering from the losses seen in early trading.
