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BofA fined $10 million for illegal garnishment procedures

Charlotte, NC
05/04/2022
Fine Amount: 
$10 million
Penalty Type: 
Issued by: 

The CFPB has issued a Consent Order after reviewing the garniishment-related practices of Bank of America, N.A., and identifying the following law violations. The bank engaged in:

  1. Unfair acts and practices by responding to and processing garnishment notices against out-of-state bank accounts in violation of certain garnishment-issuing states’ prohibitions against out-of-state garnishment.
  2. Unfair acts and practices by failing to apply the appropriate state exemptions to certain consumers’ deposit accounts after receiving garnishment notices.
  3. Deceptive acts and practices by misrepresenting to consumers, by implication, the applicable state exemption rights for garnishment by applying the issuing state’s exemptions instead of the exemptions of the consumer’s state of residence, where the states of issuance and residence differ.
  4. Unfair acts and practices by using a deposit agreement that required consumers to direct the bank not to contest legal process and waive the bank’s liability for its
    unlawful garnishment conduct.
  5. Deceptive acts and practices by suggesting consumers could not bring legal claims, misrepresenting consumers’ legal rights against Respondent regarding garnishment proceedings.
      These acts and practices are in violation of Sections 1031(a) and 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a) and 5536(a)(1)(B).

      The order directs the bank to:

    • Refund at least $592,000 in garnishment-related fees to harmed consumers: Bank of America must refund or cancel all unlawful garnishment-related fees.
    • Fix its broken garnishment process: Bank of America must review and reform its system for processing garnishments, and it must notify courts or other garnishment issuers when accounts are located out-of-state.
    • Eliminate unenforceable clauses from its contracts: Bank of America must cease including language in customer contracts that purports to limit customer rights to challenge garnishments.
    • Pay a $10 million fine: Bank of America must pay a $10 million dollar penalty to the CFPB, which will be deposited into the CFPB’s Civil Penalty Fund.

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