Bank of America ordered to reimburse millions for 'junk fees'
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For years, banks have gotten away with charging all kinds of fees, like when customers have insufficient funds in their accounts. But regulators are pushing back on them more aggressively. In the latest case, they've ordered Bank of America to pay $250 million in fees and penalties, some of which will go back to customers. As NPR's David Gura reports, this is part of a broader crackdown on what have come to be called junk fees.
DAVID GURA, BYLINE: For years, if you were a Bank of America customer and you tried to buy something but you didn't have enough money in your account to cover the cost of it, there would be a $35 fee. Then if that store or that restaurant tried to process that transaction again and you still didn't have enough money in your account, you'd face another penalty. Rohit Chopra runs the Consumer Financial Protection Bureau, and he says banks can't do this.
ROHIT CHOPRA: Building a business model by double-dipping on fees is simply not legal. And that's why we've sanctioned Bank of America and ordered them to pay back the customers they cheated.
GURA: This order is one of several announced today. Bank of America is also being fined by another U.S. regulator, the Office of the Comptroller of the Currency, and it will pay additional penalties for failing to give credit card customers rewards they were promised and for opening unauthorized credit card accounts. Chopra attributes that to pressure-cooker sales incentives, an issue the CFPB also identified at Wells Fargo. And he says other financial firms are on notice.
CHOPRA: Any illegal activity at big banks like Bank of America poses serious harm.
GURA: In a statement, Bank of America says it's reduced and eliminated some of the fees it charged customers. Senator Elizabeth Warren is one of several lawmakers calling on the banking industry to cut back on them and calling on regulators like the CFPB to do more. Here's the Massachusetts Democrat at a Senate hearing in 2022, pointing out these fees impact some of these banks' most vulnerable customers.
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ELIZABETH WARREN: They are also disproportionately Black and Hispanic Americans who make on average less than $50,000 a year.
GURA: And according to the CFPB director, these fees can send poor Americans into a financial tailspin. And stay tuned, Chopra adds. The CFPB is also considering taking regulatory action against other fees customers hate, including overdraft fees. David Gura, NPR News, New York.
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