The Consumer Financial Protection Bureau (CFPB) announced enforcement action against Bank of America this week. In a press release, the bureau confirmed it has taken action to rein in a variety of customer abuses. The bank will be required to pay its customers more than $100 million for alleged junk fee charges and other violations. In addition, BofA will pay penalties to the CFPB and the Office of the Comptroller of the Currency.
Why the enforcement action was taken
According to the announcement, the bank’s actions caused real harm to hundred of thousands of its customers. The CFPB cited a BofA policy that allowed the bank to repeatedly charge customers $35 for the same insufficient funds transactions. That “double-dipping” scheme reportedly enabled the bank to enjoy “substantial additional revenue” for illegal fee charges.
BofA also denied customers promised rewards and bonus points on credit cards. The bureau cited a failure in the bank’s business processes as the reason for these illegal activities. Finally, BofA employees illegally obtained or used customer credit reports to enroll those customers in credit card accounts without their consent. Those actions led to negative impacts on customers’ credit, as well as fee charges.
What the order requires Bank of America to do
The CFPB said that its enforcement action is justified due to the bank’s violations of the Consumer Financial Protection Act. It also cited violations of the Fair Credit Reporting Act and the Truth in Lending Act. The enforcement order requires Bank of America to immediately cease the illicit activities cited in the press release.
The financial penalties include more than $80 million in reimbursement to customers who were unlawfully charged repeat fees. In addition, BofA must pay compensation to customers harmed by its illicit credit card practices. Finally, the enforcement action requires the bank to pay $90 million in penalties to the CFPB and an additional $60 million to the OCC.
