Bank of America Fined for Unlawful Garnishments

Consumer Bureau action imposes $10 million fine on one of nation’s largest banks

Andy Spears


Photo by Etienne Martin on Unsplash

The Consumer Financial Protection Bureau (CFPB) has fined Bank of America $10 million for the bank’s unlawful processing of out-of-state garnishments.

The CFPB notes that the bank acted unlawfully in processing garnishment orders and harmed customers by taking money from accounts without following the proper process.

According to the CFPB, Bank of America unlawfully froze customer accounts, charged garnishment fees, garnished funds, and sent payments to creditors based on out-of-state garnishment court orders that should have been processed under the laws and protections of the states where the consumers lived. Bank of America also violated the law by inserting unfair and unenforceable language into customer contracts that purported to limit customers’ rights to challenge garnishments.

“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,” said Rohit Chopra. “The CFPB is ordering Bank of America to fix its systems, clean up its contracts, and make its victims whole.”

The CFPB order notes:

Since August 1, 2011, Bank of America unlawfully garnished at least 3,700 out-of-state accounts, and the customers whose accounts were garnished have paid at least $592,000 in garnishment fees. The CFPB found that Bank of America engaged in unfair and deceptive acts and practices that resulted in money from customers’ bank accounts being frozen or taken when the garnishments were not permissible under the state laws where the accounts were located.

In addition to the civil penalty, Bank of America must refund customer money and take steps to ensure these types of actions do not happen again.

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .