Bank of America Corporation BAC is under investigation by the Consumer Financial Protection Bureau (“CFPB”) to find out if it opened unauthorized customer accounts to meet sales goals back in 2014.
In March 2019, the CFPB demanded that BofA provide documents concerning “unlawful acts or practices in connection with unauthorized consumer bank, credit card, and other accounts.”
The CFPB’s probe came to light recently when on Tuesday the regulatory body posted the documents that it sought from the bank. The documents showed legal disputes between the CFPB and BofA over the past six months.
Notably, after Wells Fargo & Company’s WFC fake account scandal came to light, the Office of the Comptroller of the Currency (“OCC”) already investigated more than 40 banks, including BofA, for similar wrongdoing.
Hence, in a March petition, BofA requested that the CFPB dismisses its demand. This is because the bank felt that the OCC’s investigation was suitable, but now the probe that the CFPB is conducting is “unnecessary, redundant and unduly burdensome.”
In fact, BofA said that the evidence that it provided earlier to the agency were proof that the bank did not have any systemic sales misconduct issues. It was established that there were certain instances of “potentially unauthorized credit card accounts” but the number was identified as “vanishingly small.”
Hence, in its petition to dismiss CFPB’s probe, BofA argued that the CFPB should modify its investigation and keep certain information confidential.
BofA mentioned that before March 2017, customers that opened accounts with the bank were not required to provide signatures to serve as evidence of their intent. Instead, their authorization was captured via a digital interface.
While the bank has changed this practice, it said that no evidence suggests that the practice it followed in the pre-2017 period promoted the opening of customer accounts without their authorization.
Andy Aldridge, a spokesman for BofA stated, “In previous reviews, we have worked with regulators to confirm we have the right processes and controls in place to govern our sales practices, and that we have not experienced any systemic issues. We will continue to cooperate with the CFPB, and look forward to wrapping up this investigation and demonstrating what prior reviews confirmed.”
In July 2019, Kathleen Kraninger, the CFPB’s director denied BofA’s request to modify its investigation. However, recently, even though in part, she granted its request for keeping the information confidential.
Many finance companies across the globe have been facing increasing scrutiny for their business practices. Many of these firms have paid billions of dollars as fines and compensation to settle lawsuits and probes.
Recently, Deutsche Bank AG DB agreed to pay $15 million in penalty to settle allegations that it exploited its market presence by overcharging clients for unsecured bonds issued by Fannie Mae and Freddie Mac between 2009 and 2016.
In June 2019, State Street Corporation STT agreed to pay $94.3 million for consistently overcharging mutual fund customers and other clients through concealed markups on back-office expenses for around 17 years.