Overdraft, insufficient funds fees lead to penalties, restitution of more than $160 million for BofA

Penalties and restitution totaling more than $160 million against Bank of America for assessments of allegedly illegal overdraft and insufficient funds fees were announced Tuesday by the regulator of national banks and the federal consumer financial protection agency.

According to the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB), the bank was penalized $60 million for, by the OCC, “violations of law relating to its practice of assessing multiple overdraft and insufficient funds fees against customers for a single transaction.” The CFPB penalized the bank for more than $100 million for “systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.”

The bureau said that in opening accounts without consent, Bank of America “obtained consumer credit reports without a permissible purpose, in violation of the Truth in Lending Act and its implementing regulation, the Fair Credit Reporting Act, and the Consumer Financial Protection Act of 2010.”

The OCC order was a civil money penalty (CMP); the order from the bureau was a combination of restitution to be paid to consumers and a $90 million penalty.

According to the agencies, the bank charged customers “tens of millions of dollars” in fees on resubmitted transactions. The agencies said the bank’s practices violated Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices.

“Generally, when a bank receives a check or automated clearing house (ACH) transaction for payment from a customer’s deposit account, and the account has insufficient funds available for the payment, the bank may decline to pay the transaction and charge the customer an insufficient funds (NSF) fee,” the OCC said in a release. “In some instances, third-party merchants resubmit, or represent, such checks or transactions for payment.”

But the agencies contend that, upon representment, if the customer’s account still had insufficient funds, Bank of America either charged an additional $35 NSF fee or paid the transaction and charged a $35 overdraft fee.

“The bank’s disclosures did not clearly explain that multiple fees could result from the same transaction,” the OCC said in its release. “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 agencies said that, in response to “supervisory concerns,” Bank of America has waived, refunded, or agreed to refund tens of millions of dollars to customers who were harmed by its practice of charging such fees.

OCC Assesses $60 Million Civil Money Penalty Against Bank of America Related to Bank’s Overdraft Program

CFPB Takes Action Against Bank of America for Illegally Charging Junk Fees, Withholding Credit Card Rewards, and Opening Fake Accounts