Bank of America Fined $10 Million by CFPB for Freezing Accounts

(Bloomberg) -- The U.S. consumer watchdog is ordering Bank of America Corp. to pay a $10 million penalty and repay fees that the lender charged customers when garnishing wages.

The Consumer Financial Protection Bureau said on Wednesday that the Charlotte, North Carolina-based lender incorrectly froze accounts and garnished customer funds based on out-of-state court orders. The lender should have ensured that it was complying with the laws and protections in states where its clients lived, the CFPB said.

“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,” Rohit Chopra, who leads the agency, said in a statement. “The CFPB is ordering Bank of America to fix its systems, clean up its contracts, and make its victims whole.”

In an e-mailed statement, Bank of America said it had “enhanced our processes to ensure compliance with all applicable state laws as we execute court orders.” The lender said it would refund fees to customers related to approximately 3,700 cases.

The CFPB said that since August 2011, Bank of America customers paid almost $600,000 in fees tied to those garnishments. The cases at issue represent a small fraction of the total number of court orders processed by the bank over the period. 

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