How China’s Crumbling Real-Estate Market Puts The World Economy At Risk
The fallout of China’s real-estate market weighs on the rest of the nation’s economy -- and soon, the world's.The fallout of China’s real-estate market weighs on the rest of the nation’s economy -- and soon, the world's.Bank of America hit with $250 million in penalties after allegedly denying customers promised cash rewards, double-charging them, and damaging their credit scores
Federal regulators are penalizing Bank of America to the tune of $250 million for allegedly taking advantage of customers.
The Consumer Financial Protection Bureau announced Tuesday that the bank will pay over $100 million to the consumers who were adversely impacted and another $150 million in penalties to the CFPB and the Office of the Comptroller of the Currency.
The bank has been accused of "systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization."
CFPB director Rohit Chopra said in a statement, "These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system."
The OCC similarly determined that the bank's double-dipping on fees was illegal.
As a result, the bank is required to pay $90 million in penalties to the CFPB and another $60 million to the OCC.
Bank of America had a policy whereby customers would be hit with a $35 charge if they had a transaction declined on account of insufficient funds in their account. With the alleged objective of harvesting junk fees, the bank would allow fees to be repeatedly charged for the same interactions and did so over a period of multiple years, according to the CFPB.
While allegedly double-dipping, the bank has also been accused of signing up tens of thousands of customers on false promises of cash rewards and points, then failing to follow through.
The CFPB's and OCC's penalties also reflect an alleged long-standing scheme undertaken by Bank of America employees that damaged customers' credit scores.
Since 2012, employees seeking to cut corners in order to hit incentive goals and satisfy evaluation criteria are said to have illegally used consumers' credit reports without their consent to apply for and enroll in credit card accounts. Although the bank employees appear to have benefited, the customers whose information was illegally used without their knowledge "were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors."
Axios reported that while ostensibly different in scope, the details of this scandal are reminiscent of what Wells Faro was accused of in 2016.
Wells Fargo ended up agreeing in February 2020 to pay a $3 billion fine to settle the resultant civil lawsuit and to resolve a criminal prosecution filed by the Department of Justice, after it was discovered that bank employees opened millions of savings and checking accounts in the names of extant customers without their consent, reported NBC News.
The CFPB stressed that Bank of America has a long history of ripping off customers, having been forced to cough up $727 million to its victims for illegal credit card practices in 2014 and a fine of $225 million last year for "wrongfully freezing accounts" at the height of the pandemic.
This time around, Bank of America has been ordered to compensate the victims of the "unlawful non-sufficient fund fees who have not already been made whole by the bank." This approximate total is $80.4 million in consumer redress.
Customers owed bonuses who have not yet been compensated will similarly be made whole.
A CFPB spokesman told MarketWatch that customers affected by these alleged abuses don't have to do anything to get what's owed them.
"Depending on the circumstances of the consumer, Bank of America will deposit funds into the consumer's deposit account or will send the consumer a check," said the spokesman.
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Equifax blames 'coding error' for millions of incorrect credit reports issued earlier this year
One of the "Big Three" consumer credit reporting agencies admitted to a "potential miscalculation" in the credit reports it issued earlier this year, affecting perhaps millions of consumers looking to secure loans.
On Tuesday, the Wall Street Journal was the first to report that Equifax had erroneously calculated some credit scores during a three-week period earlier this year, and Equifax has since released a statement admitting that "a coding issue" during the migration process to Equifax Cloud™ caused a "potential miscalculation" in the algorithm for the millions of credit reports issued between March 17 and April 6.
"As part of this extensive analysis, we have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue," a company statement reads in part. "For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision...
"Our data shows that less than 300,000 consumers experienced a score shift of 25 points or more. While the score may have shifted, a score shift does not necessarily mean that a consumer’s credit decision was negatively impacted. We are collaborating with our customers to determine the actual impact to consumers."
While Equifax insists that only a small fraction of the consumers who received reports during this time period "experienced" a significant "score shift," which may or may have affected a "credit decision," others believe the impact of this error may have prevented hundreds of thousands of people from securing car or home loans or from opening a credit card. It may have forced others who received a loan to pay a higher interest rate.
The United States Public Interest Group tweeted that, because of this glitch, "Equifax has shown once again that we can’t trust it to do its one job. Regulators should investigate; Congress should require credit bureaus to pay hefty fines when they put people’s credit at risk."
Even a tweet from CNN suggests that the damage could be widespread: "Credit giant Equifax issued incorrect scores for millions of people, in some cases so significantly that lenders may have wrongfully denied loans."
The U.K. Daily Mail also published an article listing a series of people who claim to have been adversely affected by the Equifax error, though their stories have not yet been verified.
Since Equifax had a serious security breach back in 2017 that compromised the private data of nearly 150 million people, many are hesitant to trust Equifax's assessment of the consumer impact caused by the company's latest misstep.
Visa and Mastercard suspend operations in Russia
Visa and Mastercard are cutting ties with Russia as Western sanctions continue to ravage the Russian economy in response to Vladimir Putin’s invasion of Ukraine.
The Independent reported that Visa and Mastercard are suspending operations in Russia “over the coming days.” Visa said that once its ban is in place Visa bank and credit cards issued in Russia will not work abroad and cards issued to people outside of Russia will not work inside the country.
Al Kelly, the CEO of Visa, said, “We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed.”
Mastercard issued a statement expressing a similar view calling the Russian invasion of Ukraine “shocking and devastating.”
The company said, “With this action, cards issued by Russian banks will no longer be supported by the Mastercard network. And, any Mastercard issued outside of the country will not work at Russian merchants or ATMs.”
“These have been and will continue to be very difficult days – most of all for our employees and their families in Ukraine; for our colleagues with relatives and friends in the region; for our colleagues in Russia; and for the rest of us who are watching from afar,” Mastercard added.
Previously, the Ukrainian government called on international financial institutions to cut ties with Russia to apply maximum pressure to Russian leadership.
In late February, shortly after Russia launched its invasion of Ukraine, Western nations issued a series of thoroughgoing sanctions on the Russian economy.
Notably, leaders from the European Commission, France, Germany, Italy, Canada, the United Kingdom, and the United States locked arms in a joint statement calling for Russian banks to be removed from the SWIFT telecommunications network.
They said, “We stand with the Ukrainian government and the Ukrainian people in their heroic efforts to resist Russia’s invasion. Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending. We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.”
The European Commission took further steps against Russia and banned all Russian planes from European airspace.
In response to Western sanctions, corporations took steps to sever their relationships with Russia as they try to exhaust the Russian economy.
The British Petroleum Company (BP) announced that it would liquidate its holdings in Russian state-owned energy companies. BP owns a nearly 20% stake in Rosneft; the British company intends to end its partnership with Russian energy companies which it hopes will put strain on Russia’s ability to export fossil fuels and natural gas.
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