Deceptive practices by Bank of America against hundreds of thousands of customers have resulted in over $250 million in penalties.
On Tuesday, the Consumer Financial Protection Bureau (CFPB) issued a statement about their findings against the second-largest bank in the nation. According to them, the bank has a history of charging multiple overdraft fees, $35 a pop, for the same failed transaction, driving customer’s accounts deep into the red. They only corrected these ‘mistakes’ when the customer noticed it, instead of auditing their own transactions as is required of any financial institution.
They also signed up customers for card accounts without their consent to meet new account quotas, in an echo of the 2016 Wells Fargo scandal. And those who had legitimate card accounts with Bank of America were shorted on the rewards due to them.
“These practices are illegal and undermine customer trust,” CFPB Director Rohit Chopra said in the statement. “The CFPB will be putting an end to these practices across the banking system.”
Bank of America is ordered to pay just over $80 million to customers who were charged illegitimate fees, and has already paid $23 million to compensate those who lost out on credit card benefits. On top of this, they have been fined $150 million in penalties for deceptive practice to the CFPB and the Office of the Comptroller of the Currency.
Bank of America spokesman Bill Halldin said in a response the lender “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” resulting in a 90% drop in revenue from those fees.
Bank of America reported $27.5 billion dollars in net income in 2022, and over $32 billion the year before. While these fines are a measure of deterrence against future deceptive practices, they aren’t much of one. $253 million is less than 1% of their net income from last year, or less than 0.1% of the equity in the company. It’s guaranteed that no one whose decisions cost customers so much money felt any of that strike against the bank hit their own wallets.
