Bank of America (BOA) must enjoy its time in hot water. For the second time in two months, the bank is having to fork over millions to consumers wronged by its practices.
First, BOA agreed to pay some current and former customers part of an $8 million settlement, stemming from unfair overdraft and non-sufficient funds (NSF) fees on checks.
Now, the Consumer Financial Protection Bureau (CFPB) has ordered BOA to pay more than $100 million to customers for crossing the line on managing their accounts.
The bank's "double-dipping" on NSF fees did it in again, as did a charge that the bank withheld reward bonuses promised to credit card customers. The third error was misappropriating sensitive personal information to open accounts without telling the customer or getting their approval.
“Bank of America is a repeat offender. Being a household name that has been punished before didn’t stop it from allegedly cheating customers out of tens of millions of dollars in fees and credit card rewards and opening up accounts without their authorization," Mike Litt, U.S. PIRG’s consumer campaign director, said in response to the agency's action.
"The Consumer Financial Protection Bureau’s strong enforcement action shows why it makes a difference to have a federal agency monitoring the financial marketplace day in and day out. We need the government to ensure that the CFPB continues to get reliably funded to do its one job: protecting consumers.”
36,002 complaints made an impact
Both CFPB’s and ConsumerAffairs reviews databases are loaded with Bank of America complaints about such offenses.
“If you look at the many reviews below, you'll read the personal details of how terrible this bank is. They don't care about the customer,” Koji of Dallas, Ga., wrote in their ConsumerAffairs review of BOA. “They are so big and so large that they know they can treat you however they feel like. If they want to lock you out of your account and call it a "system issue" then they can do so. If they want to charge you excessive fees, then they can also do that.”
One of the 36,002 complaints against BOA at the CFPB said that the bank charged them interest on a $0.00 balance and told them that they had to have several months of a zero balance before interest wouldn’t accrue.
And the credit card bonus issue? “Applied for [a] Bank of America card for a promotion of [X] miles with {$2000.00} in purchases. Now Bank of America refuses to budge and says my promotion was for [more] miles with {$3000.00} in purchases,” complained another frustrated BOA customer.
“They changed the promotion terms on their end AFTER I applied and I never agreed to those terms. They refuse to give me the XXXX bonus miles I am due after spending the {$2000.00} in purchases on my first billing cycle for said credit card.”
Enforcement Action
Luckily, the tens of thousands of BOA customers aggrieved by the bank have the Consumer Financial Protection Act on their side. That Act gives the CFPB the authority to take action against institutions violating consumer financial protection laws and will require Bank of America to:
Stop its repeat offenses: Bank of America must stop opening unauthorized accounts, disclose material restrictions on rewards cards and provide bonuses as advertised. Furthermore, Bank of America is prohibited from charging repeat non-sufficient fund fees in the future, even though it has generally reduced its reliance on junk fees.
Pay redress to harmed consumers: Bank of America is required to make whole consumers who were charged unlawful non-sufficient funds fees, totaling $80.4 million in consumer redress. But the CFPB doesn’t stop there. The bank must also provide compensation to consumers who incurred costs associated with the unauthorized opening of new credit card accounts, and any customers improperly denied bonuses whom the bank has not already made whole.
Pay tens of millions in penalties to the CFPB: A hefty $60 million will move from BOA’s pockets to the victims for charging repeat non-sufficient funds fees, and a $30 million penalty for its credit card rewards practices and for opening unauthorized accounts. The penalties will be deposited into the CFPB’s victims relief fund.
