May 13, 2022

CFPB Fines Bank of America $10 Million Over Alleged Misconduct Regarding Out-of-State Account Garnishments

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

The CFPB and Bank of America have reached a settlement to resolve allegations that Bank of America—the nation’s second largest retail bank—illegally processed out-of-state garnishment orders and misled consumers regarding their rights concerning application of those orders, in violation of the Consumer Financial Protection Act of 2010.
According to the CFPB, Bank of America improperly processed at least 3,700 garnishment notices from out-of-state creditors between 2011 and 2022 pursuant to the law of the issuing state (rather than the state in which the customer resided), resulting in $592,000 in garnishment fees to affected customers, and unlawfully included language in customer contracts waiving or limiting their rights to challenge these garnishments.
Under the terms of the Consent Order, Bank of America will pay a civil money penalty of $10 million, refund garnishment fees to affected consumers, and must revise their internal processes for handling out-of-state garnishments, and revise customer contracts to eliminate language limiting customers’ rights to challenge garnishments, among other things.

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