As of Tuesday morning, Bank of America (BofA) bears an unfavorable image after agreeing to a $250 million settlement, which includes $150 million in penalties and an additional $100 million in consumer compensation. Complaints of using credit cards without authorization, charging excessive fees, and unfairly withholding incentives led to the settlement. US regulatory agencies made these assertions. The Consumer Financial Protection Bureau (CFPB) levied the sanction in retaliation for the bank repeatedly and consistently charging fees on accounts with inadequate cash. In addition, the CFPB claimed that the bank had signed up consumers for new cards without getting their permission or knowledge and had failed to deliver the promised credit card reward bonuses.
The $150 million penalty is divided into two parts: the CFPB will receive $90 million and the Office of the Comptroller of the Currency will receive $60 million. According to Bloomberg, the bank did not admit or deny the accusations when the matter was settled. The director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra, stated in a statement on Tuesday that Bank of America had wrongfully held back credit-card incentives, charged double fees, and created new accounts without the required authorizations. Such actions, according to Chopra, are illegal and undermine client trust. According to their statement, the CFPB showed that Bank of America charged customers a $35 overdraft fee and permitted numerous charges for the same transaction, a practice known as “double-dipping.” In response, Bank of America said that during the first half of 2022, it voluntarily decreased overdraft fees and altogether eliminated all non-sufficient fund fees. BofA did not, however, address the circumstances or the claims leveled against the bank.
U.S. Senator Elizabeth Warren (D-MA) criticized the procedures, commenting that the practices “snatch billions from struggling families” along with other negative remarks. After all of the negative feedback that BofA received, the bank agreed to reduce the fees assessed to customers for not having enough money to clear check and debit-card charges in the early months of 2022.