Alleging Illegal Credit Card Practices, the CFPB And OCC Fine BofA

Bank of America Corp. has again run afoul of the Consumer Financial Protection Bureau for alleged illicit credit card practices.

On Tuesday, the CFPB and the Office of the Comptroller of the Currency announced they are fining the banking giant $150 million for double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses to credit card holders, and misappropriating sensitive personal information to open accounts without customers’ knowledge or authorization.

Under the regulatory agencies’ rulings, BofA will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC, which also found that the bank’s double-dipping on fees was illegal. In addition, BofA will pay more than $100 million to customers allegedly victimized by the illegal practices.

A spokesman says BofA has already taken steps to cut or scrub fees, resulting in a heavy hit to fee revenue. “We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry-leading changes, revenue from these fees has dropped more than 90%,” the spokesperson says in an email message to Digital Transactions News.

This is not the first time BofA has incurred penalties from the CFPB for alleged deceptive card practices. In 2014, the agency ordered BofA to pay its credit card holders $714 million in compensation for what it said were illegal credit card practices. Other instances cited by the consumer watchdog include unlawful garnishments in 2022, for which the bank was ordered to pay a $10 million civil penalty. In 2020, the CFPB and the OCC fined BofA $225 million for what they said were “botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic” and ordered the bank to pay hundreds of millions of dollars in reparations to affected consumers.   

In its latest investigation of BofA’s credit card business, the CFPB says it found the bank had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The bureau says its investigation indicated BofA double-dipped by allowing fees to be repeatedly charged for the same transaction.

The investigation also found that BofA withheld cash and points rewards on credit cards despite the bank’s practice of targeting consumers with special offers of cash and points for signing up for a credit card. The bank withheld cash rewards or bonus points from tens of thousands of its credit card holders and failed to honor rewards promises for consumers that submitted in-person or over-the-phone applications, the CFPB alleged. The bank also denied sign-up bonuses to consumers due to the failure of its business processes and systems, according to the CFPB.

Lastly, the CFPB says BofA misused customer information to open unauthorized accounts in customers’ names dating back to 2012. The practice took place to “reach now disbanded sales-based incentive goals and evaluation criteria” for employees, the CFPB says. Specifically, BofA employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization.

“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra, in a statement. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”