Banking

BofA fined $30M, accused of breaking law protecting service members

Bank of America has been fined $30 million to resolve claims it violated federal law that protects military members as they enter active duty, a regulator said Friday.
Bank of America has been fined $30 million to resolve claims it violated federal law that protects military members as they enter active duty, a regulator said Friday. Bloomberg

Bank of America has agreed to a $30 million fine to settle a regulator’s claims that it violated consumer protection laws for military service members and engaged in improper debt-collection practices affecting military and non-military customers.

The Office of the Comptroller of the Currency, in announcing the deal Friday, said the Charlotte lender engaged in “unsafe or unsound practices” regarding both issues.

In addition to the $30 million civil penalty the bank will pay to the U.S. Treasury, it has been ordered to provide remediation to approximately 73,000 military customers. The comptroller also told the bank to fix deficiencies and make improvements in its compliance practices.

In a statement, Bank of America said the issues cited by the regulator were uncovered in reviews that began four years ago. Since then, according to the statement, the bank has make enhancements to its practices and “is building upon a number of initiatives already underway to better manage compliance risk going forward.”

The comptroller cited Bank of America for a variety of failures in the handling of court documents as the lender sought to collect on credit card and other consumer debts.

For instance, the bank filed affidavits in which the person preparing the document claimed they had reviewed records related to the case when in many instances they had not, the regulator said. Those affidavits had been prepared by the bank’s employees or employees of third-party service providers, according to the regulator.

The bank also filed affidavits in court without following proper notary procedures, the regulator said.

In faulting Bank of America for its treatment of military customers, the regulator said the lender violated the Servicemembers Civil Relief Act. That law grants various protections for military members as they enter active duty.

The regulator said Bank of America must improve its policies and procedures for determining whether military personnel are eligible for certain consumer protections offered under the act. The bank must also make other improvements, including making sure it is correctly calculating the benefits.

It’s the latest action against Bank of America to resolve claims it violated that law.

In 2013, the U.S. Justice Department announced the bank would pay roughly $36.8 million to military service members whose homes were illegally foreclosed upon from 2006 to 2010.

Regulators and the Justice Department have reached settlements with other banks over alleged violations of the act. Just this February, the Justice Department announced settlements with five of the nation’s largest mortgage servicers, including Ally Financial, Bank of America and Wells Fargo.

“We have taken significant steps over the last several years, and will take further steps now, to ensure we have the right controls and processes in place to meet – and exceed – what is required by law and what our military customers deserve and expect,” Andrew Plepler, the bank’s executive over global corporate social responsibility and consumer policy, said in a statement Friday.

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Twitter: @DeonERoberts

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