Bank of America to pay $100million to customers for 'unlawful practices'

The US Consumer Financial Protection Bureau (CFPB) has taken Bank of America to task for engaging in a series of illicit actions that erode customer trust.

While the bank stated that certain practices have already been terminated, it did not admit any wrongdoing. Bank of America has agreed to pay a total of $150 million in fines and provide $100 million in customer reimbursements.

According to CFPB Director Rohit Chopra, "Bank of America wrongfully withheld credit card rewards, charged excessive fees and opened accounts without customer consent."

The director also emphasised the agency's determination to eliminate such practices throughout the banking system. In early 2022, the CFPB announced its commitment to scrutinising hidden fees and harmful financial practices that hinder fair competition.

Chopra previously expressed his intent to put an end to the banking industry's reliance on what he termed "exploitative" revenue streams.

"As a result of Bank of America's actions, consumers incurred unjustified fees, experienced adverse effects on their credit profiles, and had to spend time rectifying errors," the CFPB explained.

The consent order states that opening new credit card accounts without customer consent violated the bank's policies and procedures and affected only a "small percentage" of new accounts.

Bank of America, "in the interest of compliance and resolution of the matter, and without admitting or denying any wrongdoing," has consented to the order, according to regulatory filings.

The bank has been found guilty of engaging in illicit practices such as charging repetitive fees for the same transaction, called double-dipping, withholding credit card and account opening rewards, and opening unauthorised accounts without users' consents.