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According to the CFPB , from January 2012 through February 2021 , Bank of America advertised a sign-up bonus program linked to the use of reward cards on its website . These advertisements offered sign-up bonuses of cash or points in exchange for qualified applicants using applicable cards . However , the CFPB highlighted that all online advertisements did not explicitly state bonuses offered were limited to online applications . They indicated the bank inadvertently created the misleading impression that the offers were available to all applicants , regardless of the application channel used . In separate situations , the CFPB also found some customers who were targeted for sign-up bonuses and applied for reward credit cards did not receive the promised rewards due to employees not accurately completing the application process .
As for credit card account-opening practices , the CFPB further found employees had submitted applications for , and issued credit cards , without consumers ’ consent and obtained credit reports in connection with these applications . The CFPB ’ s order acknowledged the root cause of this abusive practice stemmed from salesbased goals and compensation programs the institution previously implemented to incentivize financial center employees to push the product to consumers . The order further acknowledged Bank of America discontinued this compensation practice and addressed the identified concerns as of Jan . 1 , 2023 .
Lending Act ( TILA ). The regulation prohibits the issuance of credit cards other than in response to an oral or written request or application , or as renewal of , or substitute for , an accepted credit card . Such practices of pulling credit reports under false pretenses of an application were also found to have violated the Fair Credit Reporting Act ( FCRA ) prohibitions on obtaining and / or using a consumer report without a permissible purpose . Conjointly , the CFPB determined the bank ’ s violations of both the TILA and FCRA were also violations of the CFPA . The CFPB has ordered Bank of America to pay approximately $ 50 million in civil money penalties and redress for alleged compliance violations .
Takeaways from the Enforcement Actions
These violations shed light on the ongoing regulatory scrutiny surrounding operational practices within financial institutions . As we continue to navigate these developments , it is imperative for your financial institution to stay informed about regulatory trends , reassess its practices for potential risk and remain vigilant in its commitment to compliance and consumer protection . If you need assistance , Doeren Mayhew ’ s regulatory compliance specialists are here to help . •••
Overall , the CFPB collectively ruled Bank of America ’ s alleged practices of issuing credit cards without consumers ’ consent violated provisions of the Truth in
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