CFPB slams BofA with quarter-billion-dollar settlement

Brian Moynihan

The bureau will keep $90 million, with the rest going to consumers, Office of the Comptroller of the Currency.

The Consumer Financial Protection Bureau has slugged Bank of America with a huge $250 million settlement over the bank’s “consumer abuses.”

The bank was accused of opening accounts without permission, charging unfair overdraft fees and failing to honor credit card benefits.

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

The bank had a practice of charging $35 for declining a transaction for insufficient funds, and was accused of “double dipping” and charging more than once for the same transaction. Its practice of opening credit card accounts without asking was alleged to have started over a decade ago.

“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees [last year],” BofA said in a statement earlier Tuesday, adding that “revenue from these fees has dropped more than 90 per cent.”

Following the large win, the CFPB has an appetite to continue to fine banks. “The CFPB will be putting an end to these practices across the banking system,” Chopra continued.

It’s not been a great few weeks for the country’s second largest bank — it delayed a dividend after the Federal Reserve assessed the bank in a stress test exercise last week, and the week before it saw a paper loss of over $100 billion following its decision to pump deposits into debt markets.