[Business] Bank of America fined for junk fees and fake accounts

Bank of America has been ordered to pay out $150m (£116m) in penalties after it was found to have opened credit cards without customers' permission.

Regulators also discovered the bank "double-dipped" fees from customers and withheld promised reward bonuses.

The violations at the US's second-largest bank affect hundreds of thousands of customers and date back to 2012 in some cases, regulators said.

Bank of America has not admitted or denied the investigation's findings.

The bank has been ordered to refund customers and pay a total of $150m in penalties to the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC).

Customer refunds are expected to be worth more than $80m, the CFPB said.

The regulator said Bank of America illegally applied for and enrolled consumers in credit card accounts without their knowledge or authorisation to help bank employees reach sales incentive goals.

Customers were charged unjustified fees and "suffered negative effects to their credit profiles", said the CFPB.

Bank of America is also accused of double-dipping fees that were charged when a customer had insufficient funds in their account.

People were charged $35 when a transaction was declined. But Bank of America allowed fees to be repeatedly charged for the same transaction.

The lender said it has since ended charging the $35 fee for insufficient funds and reduced overdraft fees.

Bank of America also eliminated sales goals for its credit card staff in January 2023, and agreed to keep that change in place for at least three years.

Rohit Chopra, director at the CFPB, said: "Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent.

"These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system."

President Joe Biden has pledged to crack down on "junk fees" imposed by companies across a range of industries, including sales of concert tickets and airline flights.

He has urged Congress to outlaw certain charges, such as fees for quitting a mobile phone or pay TV service before the contract expires.

Under his direction, the CFPB increased its scrutiny of banks and their customer fees in 2022, soliciting complaints from consumers about practices such as overdraft fees.

The White House has said its push has led to more than $5bn in annual savings for the public, after many banks, including Bank of America, voluntarily eliminated or reduced the charges.

Bank of America said the money it made from overdraft and non-sufficient fund fees has dropped more than 90% as a result of changes made in the first half of 2022.

The bank was fined $20m in 2014 and ordered to pay more than $700m to customers for deceptive marketing and illegal charges related to its credit cards. It was also ordered to pay $225m in penalties last year for botching the distribution of unemployment benefits.