The Consumer Financial Protection Bureau announced that the Bank of America will be fined $10 million and forced to refund approximately $600,000 in fees to thousands of customers it says were illegally garnished.
The announcement was made on Wednesday, and the action against Bank of America comes after it processed illegal, out-of-state garnishment orders against its customers' bank accounts.
Customers had their accounts unlawfully frozen and charged illegal fees by Bank of America. On top of that, money was also withdrawn and sent to creditors based on court orders that should have been processed depending on the laws that the state they live in has, the CFPB reported.
Bank of America, the second-largest bank in the U.S., has unlawfully garnished at least 3,700 out-of-state accounts since August 2011. According to the bureau, this has amassed a total of at least $592,000 in charges.
The CFPB shared in their announcement that certain states have laws that limit court-ordered garnishments on bank accounts and paychecks, but Bank of America misled consumers about these laws and their rights, taking the money no matter what.
The agency said that certain funds are exempt from garnishments so that people still have enough money to live. Bank of America was not only misleading but also required customers to "direct" the bank not to require consent for the garnishment orders against them.
The cases that were flagged by the CFPB show less than half a percent of the 1 million court orders processed by the bank during the five years it reviewed.
Rohit Chopra, a spokesperson for the agency, shared in a statement that the actions of Bank of America have had a serious impact on their clientele.
"Bank of America imposed unlawful garnishment fees and injured its customers by inserting unenforceable clauses into contracts in an attempt to strip legal rights from families," Chopra said. "The CFPB is ordering Bank of America to fix its systems, clean up its contracts and make its victims whole."
Bank of America shared in a statement that they are working to comply with state laws in the future, CBS News reported.
"We have enhanced our processes to ensure compliance with all applicable state laws as we execute court orders. As part of this agreement, we will refund associated fees to customers involved in approximately 3,700 cases," the statement said.
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