Advertisement
Canada markets closed
  • S&P/TSX

    22,265.05
    -108.33 (-0.48%)
     
  • S&P 500

    5,306.04
    +1.32 (+0.02%)
     
  • DOW

    38,852.86
    -216.73 (-0.55%)
     
  • CAD/USD

    0.7329
    -0.0008 (-0.11%)
     
  • CRUDE OIL

    80.19
    +0.36 (+0.45%)
     
  • Bitcoin CAD

    93,531.01
    -1,403.64 (-1.48%)
     
  • CMC Crypto 200

    1,485.13
    -11.32 (-0.76%)
     
  • GOLD FUTURES

    2,361.60
    +5.10 (+0.22%)
     
  • RUSSELL 2000

    2,066.85
    -2.82 (-0.14%)
     
  • 10-Yr Bond

    4.5420
    +0.0750 (+1.68%)
     
  • NASDAQ futures

    18,940.25
    -0.25 (-0.00%)
     
  • VOLATILITY

    12.92
    +0.56 (+4.53%)
     
  • FTSE

    8,254.18
    -63.41 (-0.76%)
     
  • NIKKEI 225

    38,855.37
    -44.65 (-0.11%)
     
  • CAD/EUR

    0.6747
    -0.0005 (-0.07%)
     

Bank of America staffers secretly opened credit card accounts for people without their knowledge and damaged their credit scores: regulators

Signage is displayed outside of a Bank of America branch in Rolling Hills Estates, California, on March 13, 2023.
Signage is displayed outside of a Bank of America branch in Rolling Hills Estates, California, on March 13, 2023.PATRICK T. FALLON/AFP via Getty Images
  • Bank of America was issuing credit cards to people without their consent for years, the CFPB said.

  • The employees would secretly take people's credit reports and make bogus applications, per the CFPB.

  • The bank is ordered to pay $250 million in penalties for a number of offenses revealed Tuesday.

Bank of America employees for years have been quietly opening new credit card accounts for people without their knowledge, regulators said on Tuesday.

Since at least 2012, the bank's staff, wanting to reach their sales incentives, used information from consumers' credit reports to submit bogus account applications, the Consumer Financial Protection Bureau said in a statement.

ADVERTISEMENT

Meanwhile, those affected neither knew about these applications nor gave consent for their credit reports to be used, the statement said.

"Because of Bank of America's actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors," the bureau added.

The allegation against Bank of America is one of several announced on Tuesday by the CFPB, which ordered the bank to pay a combined $100 million to affected customers and a total fine of $150 million. The CFPB did not say how many current and former bank staffers were accused of submitting false credit card applications.

The bank is also accused of withholding cash and point rewards from customers, and charging people a $35 fee multiple times for declining the same transaction when their accounts ran out of money.

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

In 2022, Bank of America removed the non-sufficient fund fees that were repeatedly charged to customers, company spokesperson William Halldin told Insider

"We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022," Haldin said in a statement. "As a result of these industry leading changes, revenue from these fees has dropped more than 90%."

When asked about the CFPB's allegations of bogus accounts being opened, Halldin pointed to the bureau's order against the bank, which said Bank of America eliminated its sales-based goals and incentives in January.

In a separate case in May 2022, Bank of America was also made to pay $10 million in civil penalties for unlawfully garnishing its customers' wages. Later that year, it was fined $225 million by authorities for "botching" payments of state unemployment benefits during the COVID-19 pandemic.

The bank was also ordered to pay $727 million in 2014 for misleading consumers in marketing for its credit card add-ons.

In 2016, Wells Fargo was similarly fined $185 million for secretly issuing credit cards to customers without them knowing.

Read the original article on Business Insider