BofA to Pay $250M Over Extra Fees, Unauthorized Cards
Bank of America, which also didn’t admit to or deny the SEC’s allegations, said it self-reported the issues to regulators. The firm, which merged with Merrill Lynch in 2009, said in an emailed statement that it has “enhanced our process and training regarding these filings.”
Bank of America shares rose 1.1% to $28.96 at 12:24 p.m. in New York. They’ve fallen 13% this year.
Charges Criticized
The bank announced in early 2022 it would cut back on the fees it charges customers for failing to have enough money in their accounts to cover checks and debit-card charges.
Lawmakers and consumer activists have criticized the fees, with Senator Elizabeth Warren, a Democrat from Massachusetts, saying they “snatch billions from struggling families” and that “big banks raked in billions from this abusive practice” during the Covid-19 pandemic.
Bank of America didn’t completely eliminate overdraft fees, but took some steps to alleviate the impact on consumers. It did away with the transfer fee associated with its Balance Connect for overdraft-protection service and cut its overdraft fees.
The lender considered removing overdraft charges completely, but ultimately opted for a reduced fee, executives have said.
The consumer-protection bureau also alleged that, dating back to 2012, Bank of America employees opened credit-card accounts for customers without their knowledge to reach sales goals imposed upon the workers.
Those actions led to unjustified fees being charged and negative impacts on credit profiles, according to the statement. The sales incentives have since been removed, the agency said.
Rewards Withheld
The bank also withheld promised cash rewards or bonus points earned by tens of thousands of customers when signing up for Bank of America credit cards, regulators said.
“Bank of America has clearly broken the law in yet another case of Wall Street banks taking Americans’ money to pad their already massive profits,” Senator Sherrod Brown, a Democrat from Ohio, said in a statement.
In addition to the monetary penalties, the bank must change its business practices, by halting the practice of opening unauthorized accounts, disclosing limits on credit-card rewards and bonuses, and no longer charging repeat fees for non-sufficient funds.
–With assistance from Hannah Levitt
(Image: Bloomberg)
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