Bank of America Owes $10 Million for Garnishments


The Consumer Financial Protection Bureau (CFPB) announced on Wednesday that it had finalized an action against Bank of America for unlawfully garnishing customer bank accounts based on out-of-state court orders. The consumer watchdog agency has ordered the national bank to pay a $10 million fine, fix its garnishment process and make its affected customers whole.

Key Takeaways

  • Bank of America has been illegally garnishing its customers’ bank accounts to satisfy out-of-state court orders.
  • The bank has been ordered by the CFBP to pay a $10 million fine and provide recourse for its affected customers.
  • It must also fix its garnishment process and eliminate unenforceable clauses from its contracts.

Bank of America Caught Violating Consumer Protection Laws

The CFPB has found that Bank of America was in violation of consumer protection laws when it processed out-of-state garnishment orders against customer accounts. The bank froze the affected customers’ accounts, charged garnishment fees and sent garnished funds to creditors.

Garnishments are a common way for a creditor to collect on a debt when a borrower refuses to pay, but garnishment orders are only valid if they’re processed by a court under the laws and protections of a consumer’s state of residence. The CFPB found that Bank of America has processed at least 3,700 out-of-state garnishment orders since 2011, resulting in at least $592,000 in garnishment fees.

Additionally, the federal agency noted that Bank of America has added unenforceable language in its customer contracts that limits their rights to challenge a garnishment.

As a result, the CFPB has taken the following actions against the bank:

  • Ordered it to pay a $10 million fine to the CFPB. The fine will be placed in the agency’s civil penalty fund, which provides compensation to consumers whose rights have been violated due to breaches of federal financial protection laws.
  • Refund or cancel at least $592,000 in garnishment fees that have been illegally collected.
  • Eliminate the unenforceable clauses that limit customers’ rights to challenge garnishments from their contracts.
  • Review and reform its system for processing garnishments and notify courts and other garnishment issuers when an account is located in a different state.

You can read the full order on the CFPB website.



Source link

Leave a Reply