Bank of America got caught opening fake credit card accounts for customers and charging illegal junk fees

Information reaching Kossyderrickent has it that Bank of America got caught opening fake credit card accounts for customers and charging illegal junk fees.

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. Bank of America got caught opening credit card accounts for customers who did not authorize them to open these accounts

Among them, the CFPB and OCC found that the bank, which normally charged customers $35 if their transaction was declined due to insufficient funds, allowed those fees to be “repeatedly charged” for the same transaction, resulting in customers being charged “tens of millions of dollars in fees on resubmitted transactions,” according to the OCC.

That would happen after a first transaction was declined if a third-party merchant resubmitted the charge to the customer’s account, which may still have had insufficient funds to cover that expense. At that point the customer would again be hit with either a $35 insufficient funds fee or $35 overdraft fee.

“The bank’s disclosures did not clearly explain that multiple fees could result from the same transaction. Additionally, customers had no ability to know when or if a merchant would resubmit a transaction to the bank for payment and therefore could not reasonably avoid the assessment of multiple fees for the same transaction,” the OCC said in its statement.

Bank of America noted in an email to CNN that those fees were eliminated last year. “We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry-leading changes, revenue from these fees has dropped more than 90 percent,” a spokesman said.

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. Some of the charges are reminiscent of the Wells Fargo scandal last decade that involved opening millions of bank accounts without customer authorization.

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