Feds fine Bank of America $10 million for illegally seizing bank accounts
Bank of America will pay a $10 million fine and reimburse nearly $600,000 in costs to thousands of customers whose accounts were illegally seized, the Consumer Financial Protection Bureau announced Wednesday.
The CFPB stated that its application stock stems from the nation’s second-largest bank processing illegal out-of-state garnishment orders on its customers’ bank accounts. Clients’ accounts were illegally frozen, charged illegal fees and money was withdrawn and sent to creditors based on court orders that should have been processed under the laws of the state where they live, a said the agency.
Since August 2011, BofA has illegally seized at least 3,700 out-of-state accounts, charging at least $592,000 in garnishment costs while engaging in unfair practices, according to the bureau.
Some state laws limit court-ordered garnishments of bank accounts and paychecks to ensure people still have enough to live on, the CFPB noted. BofA misled consumers about their rights to have certain funds exempt from garnishment and also improperly required customers to “direct” the bank not to challenge garnishment orders against them.
“Bank of America imposed illegal garnishment fees and harmed its customers by inserting unenforceable clauses into contracts in an effort to deprive families of their legal rights,” CFPB Rohit Chopra said in a statement. statement. “The CFPB orders Bank of America to fix its systems, clean up its contracts, and heal its victims.”
The cases reported by the CFPB represent less than half a percent of the million court orders processed by BofA in the five years the federal agency reviewed, according to the company. BofA, based in Charlotte, North Carolina, operates approximately 4,100 branches in the United States
“We have enhanced our processes to ensure compliance with all applicable state laws when executing court orders. As part of this agreement, we will reimburse costs associated with clients involved in approximately 3,700 cases,” a doorman said. -says Bank of America in a statement.