Bank of America Owes $10 Million for Garnishments

The Shopper Monetary Safety Bureau (CFPB) introduced on Wednesday that it had finalized an motion in opposition to Financial institution of America for unlawfully garnishing buyer financial institution accounts primarily based on out-of-state court docket orders. The buyer watchdog company has ordered the nationwide financial institution to pay a $10 million fantastic, repair its garnishment course of and make its affected clients entire.

Key Takeaways

Financial institution of America has been illegally garnishing its clients’ financial institution accounts to fulfill out-of-state court docket orders.
The financial institution has been ordered by the CFBP to pay a $10 million fantastic and supply recourse for its affected clients.
It should additionally repair its garnishment course of and remove unenforceable clauses from its contracts.

Financial institution of America Caught Violating Shopper Safety Legal guidelines

The CFPB has discovered that Financial institution of America was in violation of shopper safety legal guidelines when it processed out-of-state garnishment orders in opposition to buyer accounts. The financial institution froze the affected clients’ accounts, charged garnishment charges and despatched garnished funds to collectors.

Garnishments are a standard approach for a creditor to gather on a debt when a borrower refuses to pay, however garnishment orders are solely legitimate in the event that they’re processed by a court docket underneath the legal guidelines and protections of a shopper’s state of residence. The CFPB discovered that Financial institution of America has processed at the least 3,700 out-of-state garnishment orders since 2011, leading to at the least $592,000 in garnishment charges.

Moreover, the federal company famous that Financial institution of America has added unenforceable language in its buyer contracts that limits their rights to problem a garnishment.

In consequence, the CFPB has taken the next actions in opposition to the financial institution:

Ordered it to pay a $10 million fantastic to the CFPB. The fantastic might be positioned within the company’s civil penalty fund, which offers compensation to customers whose rights have been violated on account of breaches of federal monetary safety legal guidelines.
Refund or cancel at the least $592,000 in garnishment charges which were illegally collected.
Eradicate the unenforceable clauses that restrict clients’ rights to problem garnishments from their contracts.
Evaluate and reform its system for processing garnishments and notify courts and different garnishment issuers when an account is positioned in a distinct state.

You possibly can learn the complete order on the CFPB web site.