Justin Boggs
If cash apps fail, consumers could lose billions, feds warn
As several traditional banks have failed this year, federal officials remind users of the risks associated with cash applications.
LEARN MOREPosted: 10:33 a.m. EDT Jul 11, 2023
Bank of America has been fined over $250 million by the Consumer Financial Protection Bureau for allegedly imposing illegal fees and withholding promised rewards.
The CFPB said that of Bank of America's fine, $100 million will return to affected customers. The CFPB also accused Bank of America of misusing personal information.
Bank of America double-dipped customers by charging them $35 fees each time the bank declined to make a transaction due to insufficient funds, the CFPB said. The CFPB said if customers attempted to make the same transaction again, Bank of America would impose the fee a second time.
"Bank of America generated substantial additional revenue by illegally charging multiple $35 fees," the CFPB said.
The CFPB said Bank of America illegally withheld promised credit card account bonuses, such as cash rewards or bonus points, due to business processes and systems failures.
Reacting to the government's announcement, Bank of America said in a statement: "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."
Additionally, the bank reduced overdraft fees from $35 to $10 in 2022, and eliminated the overdraft protection transfer fee.
The CFPB also found that bank associates "illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization." The CFPB accused Bank of America employees of illegally using or obtaining credit reports without their permission to complete applications to make sales-based incentive goals and evaluation criteria.
The CFPB said this practice has since been disbanded but "consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors."
CFPB Director Rohit Chopra said Bank of America's practices "are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Bank of America was fined $225 million in late 2022 for allegedly botching the disbursement of state unemployment benefits during the pandemic.
