OCC orders B of A to pay $60 million for OD program violations

The OCC has issued a consent order to Bank of American, N.A. for the payment of a $60,000,000 civil money penalty related to the Bank assessing multiple overdraft and insufficient funds fees against customers for a single transaction in violation of Section 5 of the Federal Trade Commission Act’s (“FTC Act”), 15 U.S.C. § 45(a)(1) prohibition against unfair and deceptive practices.

In the order, the OCC states that:

(1) In November 2021, the OCC commenced an examination with an initial focus on the Bank’s customer overdraft program between March 2020 to August 2021.

(2) OCC examiners found that, from March 1, 2020, to November 11, 2021, after the Bank declined a check or Automated Clearing House transaction due to insufficient funds, a merchant could resubmit the transaction for payment. If a customer’s account had insufficient funds to cover the resubmitted transaction, the Bank would either pay the transaction and charge a $35 overdraft fee or decline the transaction and charge an additional $35 insufficient funds fee (collectively, “Representment fees”).

(3) These Representment fees were in addition to the initial $35 insufficient funds fee the Bank charged when it first declined the transaction, resulting in the Bank charging customers multiple fees for the same declined transaction.

(4) From March 1, 2020, to November 11, 2021, the Bank charged customers tens of millions of dollars in Representment fees on resubmitted transactions, resulting in substantial injury to customers that was not outweighed by any benefits to customers or competition.

(5) Customers had no ability to know when or even if a merchant would resubmit a transaction to the Bank for payment and therefore could not reasonably avoid the assessment of multiple fees for the same transaction.

(6) From March 1, 2020, to November 11, 2021, the Bank’s Deposit Agreement and Disclosures, and its Personal Schedule of Fees (collectively, “Disclosures”), contained materially misleading representations and omissions regarding Representment fees.

(7) The Disclosures did not inform customers that they may be charged additional fees when a merchant resubmitted a transaction for payment. Rather, the Bank’s Disclosures explained consumers could be assessed an overdraft or insufficient funds fee of “$35 [for] each item.” The Disclosures defined an “item” in a way that could have led a reasonable customer to think an “item” and a “transaction” were the same thing. And, the Disclosures did not clearly state that a merchant could resubmit a declined transaction for payment. As such, a reasonable customer was likely to be misled that a transaction would only be subject to a single overdraft or insufficient funds fee.

(8) By reason of the deficiencies and conduct described in Paragraphs (1) through (7) of this Article, the Bank engaged in unfair and deceptive practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a). These violations and practices support actions against the Bank under 12 U.S.C. § 1818(i)(2)(B).

(9) In November 2021, the Bank stopped assessing Representment fees on ACH transactions. In February 2022, the Bank ceased charging Representment fees on checks, along with all other insufficient funds fees, effectively ending its practice of assessing multiple fees on a single transaction in violation of Section 5 of the FTC Act.

(10) The Bank’s efforts to reduce fees, including insufficient funds fees, has led to the Bank charging customers millions of dollars less in fees.

(11) In response to supervisory concerns, the Bank has waived, refunded, or agreed to refund tens of millions of dollars to customers harmed by its practice of charging Representment fees, between March 2020 and February 2022.