July 11 (Reuters) – Bank of America ( BAC.N ) agreed on Tuesday to pay $250 million in fines and restitution after the bank systematically charged customers twice as much, promised credit card benefits and opened accounts without customer authorization.
Bank of America has agreed to pay $100 million in restitution to affected consumers and pay an additional $150 million in civil penalties after the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) said the bank violated several laws. 2012.
Bank of America reaped hundreds of millions of dollars from February 2018 to February 2022 by charging customers who didn’t have enough money in their accounts, the CFPB said in a statement. Regulators said consumers could not reasonably expect or understand that a $35 fee would be charged each time the bank declined to pay a transaction.
In a statement, Bank of America voluntarily eliminated or reduced a variety of fees last year.
The CFPB says so-called “junk fees” are unfairly charging customers for banking services, including overdraft and insufficient funds fees.
“These practices are illegal and undermine customer confidence. The CFPB will put an end to these practices across the banking system,” CFPB Director Rohit Chopra said in a statement.
Under sales pressure or in anticipation of rewards, Bank of America employees have illegally applied for and enrolled in credit card accounts without consumers’ knowledge since at least 2012, the CFPB said. Regulators said these accounts represent a “small percentage” of new accounts at the bank.
The Charlotte, North Carolina-based bank failed to make good on promised cash rewards and bonus points to tens of thousands of credit card customers, the CFPB said.
In addition to paying $90 million in fines to the CFPB and $60 million to the OCC, the bank agreed to update regulators on its compliance progress within a year.
“We voluntarily reduced overdraft fees and eliminated all insufficient funds fees in the first half of 2022. As a result of industry-leading changes, revenue from these fees has decreased by more than 90 percent,” Bank of America said in a statement.
Democratic Senator Sherrod Brown described the case as an example of American banks putting their profits on Americans’ money.
“It’s just the latest in a long line of explanations for why we can’t trust Wall Street to do the right thing,” he said.
Separately, Bank of America financial advisory firm Merrill Lynch, Pierce, Fenner & Smith agreed to pay a $12 million fine to the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority for failing to file suspicious statements out of hundreds of regulatory action reports. From January 2009 to November 2019.
Merrill discovered the problem in 2019, according to the SEC’s order.
“Following an internal review, we have reported the matter to regulatory authorities and have improved our process and training related to these filings,” the bank said in a statement.
Bank of America shares were up 1.1% at 2:02 pm ET (1802 GMT), recovering losses seen in early trade.
Additional reporting by Rami Ayyub and Chris Prentice by Saeed Azhar and Jonathan Stempel; Editing by Emma Rumney, Michael Price, Sharon Singleton and Emilia Sithole-Madaris
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Chris Prentice reports on financial crimes, focusing on securities enforcement matters. He previously covered commodity markets and trade policy. She has received awards for her work from the Society for Advancing Business Editing and Writing and the New York Newswomen’s Club.