Bank of America agrees to pay $250 million for illegal fees, fake accounts
MICHEL MARTIN, HOST:
Bank of America, the country's second-largest bank, has been ordered to pay more than $100 million to its customers. That's after federal regulators found that the bank illegally double-charged insufficient fund fees, withheld rewards bonuses and opened credit cards without their customers' authorization over a period of several years. The bank is also being hit with another $150 million in civil penalties. Rohit Chopra is director of the Consumer Financial Protection Bureau. His agency, along with the Office of the Comptroller of the Currency, led the investigation of Bank of America, and he's with us now to tell us more. Mr. Chopra, thanks so much for joining us.
ROHIT CHOPRA: Thanks for having me.
MARTIN: So $250 million in fines and penalties overall - that's a big number. But Bank of America reported billions of dollars in profits last year. Do you think these fines and penalties are sufficient to act as a deterrent to future bad behavior?
CHOPRA: Well, certainly this is not Bank of America's first run-in with the law. And as one of the nation's largest banks, it's important that we carefully police all of their activities. But in this instance, we found certain egregious practices, like double-dipping on fees, withholding credit card rewards that were promised, and even opening fake accounts. They're ceasing the activity, and we're sending a message to other banks that they cannot engage in the same illegal conduct.
MARTIN: So this is - as you just noted, this isn't the first enforcement action that Bank of America has faced for, you know, illegal activities in this consumer business. Is there a point at which bank executives should be held personally responsible for these practices?
CHOPRA: Yeah. I think that this rinse-repeat cycle of penalties doesn't always fix the underlying problem. That's one of the reasons why the Consumer Financial Protection Bureau is looking harder at individuals, is looking at reforms outside of paying penalties, including outright limitations on certain growth and other business practices. But there's no question that we needed to obtain substantial redress for the victims that Bank of America affected. Those consumers will not have to lift a finger in order to get those refunds, and they'll be getting over $100 million.
MARTIN: So what about the - and the whole question of credit - you know, cash rewards and bonus points and things like that - how regulated are credit card rewards, and what should consumers do if they suspect that they aren't receiving promised perks?
CHOPRA: Well, one of the biggest attributes that consumers are looking at when shopping for a credit card are those rewards. It's not just airline miles or hotel points. There's now so much that card issuers are competing on, and we will not tolerate when a bank is advertising but not living up to those promises. In this case, consumers were deprived of hundreds of dollars each. And we'll be looking to make sure that other banks are not just trumpeting a fake promise, but really living up to it.
MARTIN: Rohit Chopra is director of the Consumer Financial Protection Bureau, the CFPB. Mr. Chopra, thanks so much for talking to us, and I do hope we'll talk again.
CHOPRA: Thanks again. Transcript provided by NPR, Copyright NPR.
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