CFPB and OCC Hit Bank of America with $250 Million Penalty for Consumer Abuse Practices
Bank of America joins the infamous club of consumer abusers in the banking industry, despite the alarm bells set off by the notorious Wells Fargo case. On this week's episode of Corruption, Crime and Compliance, host Michael Volkov explores the shocking details of Bank of America's recent $250 million settlement for account fraud and abuse with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC). This episode shines a light on corporate complacency, the inherent risk of ill-conceived sales incentives, and the importance of internal risk assessment in the wake of industry scandals.
Youâll hear Michael discuss:
- The fraudulent practices perpetrated by Bank of America, compared to the infamous Wells Fargo scandal. He examines the similarities in the unethical practices and failure to adhere to consumer protection laws, and the recurring patterns in the banking industry's consumer abuse cases.
- The pitfalls of sales incentives structures, particularly when they lack appropriate checks and balances. Mike elaborates on how ill-considered incentives can encourage misconduct among salespeople.
- The enforcement actions brought by the CFPB and OCC against Bank of America: fines amounted to $250 millionâ$190 million for consumer harms and penalties to the CFPB and $60 million in penalties to the OCC.
- Unscrupulous methods adopted by Bank of America employees to reach their sales targets included illegally applying for and opening credit card accounts and charging customers multiple overdraft fees for the same transactions, significantly hurting consumers financially.
- Michael dissects the bank's promotional tactics, particularly the false advertising of special offers and the denial of sign-up bonuses due to inherent failures in their business systems. He discusses the negative impact of these practices on customers and the bank's reputation.
- Highlighting the current stringent regulatory environment, Michael stresses the need for organizations, especially banks, to maintain stringent internal audits and compliance measures.
- Based on the recent enforcement actions, Michael makes informed predictions about potential regulatory actions against Bank of America and discusses the bank's responsibilities moving forward.
KEY QUOTES:
"You would think that Wells Fargo's case would have sent alarm bells throughout Bank of America to take a look at their own sales practices to make sure they don't suffer from the same type of abuse of conduct. And what's clear is Bank of America just kept its head down, blinders on, and then developed their own problem." - Michael Volkov
"Bank of America employees illegally applied for and then enrolled customers in credit card accounts in order to reach sales incentive goals." - Michael Volkov
"This is a tough regulatory environment, and you would think Bank of America would try to address that through some kind of mitigation and sort of risk analysis and conducting audits to make sure that they don't run into future abuses and practices like this." - Michael Volkov
Resources:
