Bank of America Corp. agreed to pay $150 million in fines and $100 million to customers for improperly charging extra fees, withholding rewards and opening unauthorized credit-card accounts, US regulators said.

The Consumer Financial Protection Bureau said it fined the bank for “systematically double-dipping on fees imposed on customers with insufficient funds in their account.” The lender also failed to pay promised credit-card reward bonuses and enrolled customers for cards without their knowledge or authorization, the CFPB said.

The bank agreed to pay $90 million of the penalty to the CFPB and $60 million to the Office of the Comptroller of the Currency. Bank of America didn’t admit to or deny the allegations as part of the settlement.

“Bank of America wrongfully withheld credit-card rewards, double-dipped on fees and opened accounts without consent,” CFPB Director Rohit Chopra said in a statement Tuesday. “These practices are illegal and undermine customer trust.”

The consumer-protection agency found that Bank of America charged consumers a $35 overdraft fee and then “double-dipped” by allowing fees to be charged repeatedly for the same transaction, according to the statement. That allowed the Charlotte, North Carolina-based bank to generate “substantial additional revenue,” the bureau said.

Bank of America said in an emailed statement that it “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022.” It declined to address the case or the allegations against the lender.

Fee Cutbacks
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.

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.

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.

This article was provided by Bloomberg News.