Under the terms of two separate administrative proceedings, issued July 11 by the Consumer Financial Protection Bureau (CFPB), Bank of America must pay penalties of $90 million—$60 million for charging repeat non-sufficient funds fees, and $30 million for withholding credit card rewards and for opening unauthorized accounts. Separately, the bank must pay $60 million in penalties to the Office of the Comptroller of the Currency (OCC) for the bank’s double-dipping fee practices.
Bank of America must further pay redress to harmed consumers, totaling approximately $80.4 million. The bank must also compensate consumers who incurred costs stemming from the unauthorized opening of new credit card accounts, and any customers improperly denied bonuses whom the bank has not already made whole. The bank previously paid around $23 million to consumers who were denied rewards bonuses.
Case Facts
According to the CFPB, Bank of America harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services through the following practices:
- Deployed a double-dipping scheme to harvest junk fees: According to the CFPB’s findings following its investigation, “Bank of America double dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.”
- Withheld cash and points rewards on credit cards: To compete with other credit card companies, Bank of America promised tens of thousands of consumers special offers of cash rewards or bonus points to sign up for a credit card, but failed to honor these promises, the CFPB said. “The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.”
- Misused sensitive customer information to open unauthorized accounts: “From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization,” the CFPB said. “In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. Because of Bank of America’s actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors.”
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Recidivist Bank of America
Bank of America has a long history of unethical and illegal conduct for which it has faced multiple enforcement actions, including the following:
- In April 2014, the CFPB ordered Bank of America to pay $727 million in consumer redress for illegal credit card practices.
- In August 2014, Bank of America reached a landmark $16.65 billion settlement with the Department of Justice for financial fraud leading up to the 2016 financial crisis.
- In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty for illegal garnishments.
- In July 2022, the CFPB and OCC fined Bank of America $225 million in total penalties for automatically and unlawfully freezing consumer accounts with a faulty fraud detection program, which botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.
Under this latest action, Bank of America’s practices violated the Consumer Financial Protection Act’s prohibition on unfair and deceptive acts or practices; the Fair Credit Reporting Act; the Truth in Lending Act and its implementing Regulation Z, by issuing credit cards to consumers without their knowledge or consent.
The terms of the CFPB’s latest order requires Bank of America to stop opening unauthorized accounts” and “disclose material limitations on any rewards cards bonuses and provide bonuses as advertised,” the CFPB stated. Bank of America is also “strictly prohibited from charging repeat non-sufficient funds fees in the future.” 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.