Bank of America to Pay $250M in Refunds and Fines for Junk Fees, Fake Accounts

Bank of America breached customer trust and violated several consumer protection laws, the Consumer Financial Protection Bureau said Tuesday. The bank was ordered to pay over $100 million to customers for doubling fees, enrolling them in credit card accounts without their consent and refusing to disburse credit card reward funds. 

The bank has also been ordered to dish out $150 million in penalty fines to the CFPB and the Office of the Comptroller of the Currency. The North Carolina-based institution violated the Consumer Financial Protection Act, the Fair Credit Reporting Act and the Truth in Lending Act, according to the CFPB.

During an investigation, the CFPB found that Bank of America charged customers a $35 insufficient funds fee multiple times for the same transaction. Additionally, the company signed consumers up for credit cards with the promise of cash or points rewards, but illegally withheld the bonuses from "tens of thousands of consumers," said the CFPB. The bank also enrolled customers in bogus credit card accounts without their knowledge, and in some cases, illegally pulled their credit reports to apply. 

"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," said the CFPB.

Bank of America on Tuesday was ordered to over $80 million to compensate customers who were charged illegal junk fees, as well as customers who faced costs due to the bank opening unauthorized credit card accounts. This comes on top of $23 million the bank previously paid to customers who didn't receive reward bonuses. 

Bank of America didn't immediately respond to CNET's questions on when customers can expect compensation.  

Overdraft and non-sufficient fund fees from a bank can be a costly surprise, forcing you to pay a fine for a purchase or payment when your account doesn't have enough money to cover it. The CFPB estimates banks made over $15 billion from overdraft and NSF fees in 2019. One option for consumers is to look for banks that have reduced or eliminated their overdraft fees. It's also important to fully understand any terms that come along with signing up for an account. 

Of course, junk fees aren't only a problem with bank accounts. They can be attached to everything from credit cards to concert tickets, though lawmakers have been pushing for regulation to eliminate these hidden costs. Earlier this year, President Joe Biden touted his administration's plan to cut down on junk fees across the economy, including from banks, credit cards, airlines, entertainment venues and other businesses.

For more, check out CNET's list of best credit cards with no annual fee and learn how to spot hidden fees on your internet bill.