Bank of America Gift Wraps Another Reason For Big Teams To Bail On Merrill Lynch

Just in case you’ve been living under a rock, Bank of America just got caught ‘pulling a Wells Fargo’; opening accounts on behalf of customers without their permission. Merrill Lynch has been every wirehouse and independents pipeline for the past five years, and this news isn’t going to slow that down.

In a decisive move to hold Bank of America accountable for its illicit activities, the Consumer Financial Protection Bureau (CFPB) has taken action against the financial institution. The CFPB, along with the Office of the Comptroller of the Currency (OCC), found the bank guilty of engaging in unlawful practices that harmed its customers. As a result, Bank of America has been ordered to pay more than $100 million to affected consumers and an additional $150 million in penalties.

Bank of America, being one of the largest banks in the United States, was found guilty of several violations that caused significant harm to its customers. Among the wrongdoings were imposing exorbitant fees on customers with insufficient funds in their accounts, withholding rewards promised to credit card holders, and even opening fraudulent accounts without customers’ knowledge or consent. Such practices were deemed illegal by the OCC, leading to a penalty of $90 million to the CFPB and $60 million to the OCC.

This is not the first time a major bank has faced scandal for fraudulent account openings. In 2016, Wells Fargo was embroiled in a similar controversy, having created millions of unauthorized accounts without customers’ consent, resulting in severe financial penalties and reputational damage.

CFPB Director Rohit Chopra firmly condemned Bank of America’s actions, highlighting that the bank’s practices not only breached the law but also undermined customer trust. The CFPB vowed to combat such unethical practices across the entire banking system.

Bank of America’s misconduct impacted hundreds of thousands of consumers across various product lines and services. The specific violations included double-dipping on fees, wherein the bank charged customers multiple times for insufficient funds, resulting in considerable additional revenue. The bank also failed to honor its promises of cash and points rewards to credit card holders, leading to unjust denial of sign-up bonuses. Additionally, bank employees misused sensitive customer information to open unauthorized credit card accounts, causing unjust fees, credit score impacts, and unnecessary stress for the affected consumers.

This is not the first instance of Bank of America facing enforcement actions for unlawful practices. In the past, the bank has been required to provide significant redress to victims of illegal credit card practices and unlawful garnishments. Furthermore, mishandling state unemployment benefits during the COVID-19 pandemic led to hefty fines and compensatory measures.

In response to the violations, the CFPB has issued orders requiring Bank of America to take specific actions. The bank is mandated to cease any repeat offenses, ensuring they stop opening unauthorized accounts and disclose any limitations on rewards card bonuses. Moreover, the bank must provide redress to affected consumers, compensating those who were unlawfully charged non-sufficient funds fees, those who incurred costs due to unauthorized credit card accounts, and customers who were wrongfully denied bonuses.

Finally, as part of the penalties imposed on the bank, Bank of America will pay a total of $90 million to the CFPB for its fee practices and unauthorized accounts, while an additional $60 million will be paid to the OCC for double-dipping fees.

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