A banking battle is underway as financial regulators crack down on “junk fees.” On Tuesday, regulators ordered Bank of America to pay $250M+ in fines and customer repayments for violations including double-dipping on fees, withholding credit-card perks, and opening accounts without customers’ consent.
Junk fees = additional charges, often not clearly stated, that are usually tacked on at the end of a transaction (think: airline seat selection fees, resort fees at hotels).
Double-dipped: In the case against BoA, these fees included $35 overdraft charges that could occur several times on one transaction if a merchant resubmitted a request for payment. Regulators say the bank stopped the illegal practices in 2021-22.
Trend alert: The moves against BoA are significant, but they pale in comparison to the $3.7B regulatory action brought against Wells Fargo in December over overdraft fees and other violations. Last fall, watchdogs slapped Regions Bank with a $191M fine over surprise fees.
By the numbers:
27% of checking-account holders are regularly hit with fees, costing them $288/year on average.
85% of Americans have encountered junk fees, a 2019 survey said.
90%: the drop in revenue from overdraft and insufficient-funds fees that BoA saw when it slashed these penalties in early ’22.