CFPB, OCC penalize BofA for re-presentment fees, other practices

The Consumer Financial Protection Bureau and OCC announced penalties against Bank of America for assessing multiple overdraft and non-sufficient-funds fees against customers for a single transaction, among other practices.

Re-presentment Fees: The CFPB and OCC cited Bank of America’s practice of charging multiple NSF or overdraft fees for the same transaction when a merchant re-presents an ACH payment or check after the transaction has already been declined. Both agencies said this practice —which has been the subject of FDIC and OCC guidance this year and is disclosed in accordance with regulations—is “illegal.”

Other Practices: The CFPB and OCC also said BofA withheld reward bonuses promised to credit card customers and misappropriated sensitive personal information to open accounts without customer knowledge. The agencies said BofA will pay more than $100 million to reimburse customers as well as a combined $150 million in penalties to the agencies.

FDIC Guidance: Following a meeting with ICBA earlier this year, the FDIC last month updated its supervisory guidance on multiple re-presentment nonsufficient funds fees to clarify that it will not ask institutions to conduct a lookback review absent a likelihood of substantial consumer harm. The FDIC said it has gained additional data about the amount of consumer harm associated with this issue since it issued guidance last year and cited the challenge of accurately identifying re-presented transactions through core processing systems.

Agency Meetings: ICBA leadership community bankers and staff met with FDIC and OCC officials earlier this year to express concerns with the agencies’ treatment of re-presentment fee disclosures. ICBA called on the agencies to rescind lookback requirements, focus on applying its new position on re-presented items going forward, and provide reasonable time for community banks to update their disclosures and practices to comply with the FDIC guidance.

OCC Guidance: The OCC earlier this year issued guidance that says disclosures may be deceptive if they do not clearly explain that multiple or additional fees may result from multiple presentments of the same transaction. The agency encouraged financial institutions to review overdraft practices to ensure customers are not charged overdraft fees for transactions they may not anticipate or avoid.

ICBA Guide: With community banks reporting that the FDIC is imposing violations even on banks that are compliant with fee disclosure requirements, ICBA last year released a member-protected fact sheet on the issue with recommendations for reducing the risk of penalties.