Big Banks Being Bad
America's "Big 5" banks are often on the wrong side of the law
The Big 5.
Here’s just a bit of news about players in the Big 5 banking space getting up to no good.
Citibank was recently fined $25 million for discrimination:
The CFPB investigation found that Citi not only intentionally discriminated against consumers of Armenian descent, but also took steps to cover up the discrimination. Specifically, Citi directed employees not to discuss the discriminatory practices in writing or on recorded phone calls.
Additionally, a debt collector for Citibank was called out for filing “junk lawsuits.”
In 2019, the CFPB sued Forster & Garbus alleging that, from 2014 through 2016, fewer than a dozen attorneys at Forster & Garbus filed more than 99,000 debt-collection lawsuits, while having documents to support only a fraction of those debts.
Wells Fargo is no stranger to the wrong side of the law. In fact, the bank holds the distinction of the largest fine ever assessed against a major bank for illegal activity.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” said CFPB Director Rohit Chopra. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
The CFPB noted that the misconduct by Wells Fargo impacted some 16 million consumers over a period of years.
Bank of America:
This big bank was recently fined $250 million for charging illegal fees.
The findings of the CFPB investigation indicate that Bank of America failed to credit promised credit card rewards - essentially keeping money promised to customers. The bank also charged overdraft fees ($35 each) multiple times for the same transaction, resulting in millions of dollars in illegally-gained profit at the expense of customers. The bank also opened new accounts for existing customers without informing the customer or receiving their consent.
The company also paid a $225 million fine in 2022 for illegally freezing customer accounts.
What about smaller banks?
Well, some smaller banks act up, too.
In one case, Louisville-based Republic Bank & Trust profited from a partnership with a nonbank lender charging interest rates of 99% for short-term installment loans.
Enova, the parent company of CashNetUSA and NetCredit, was recently fined $15 million for illegal activity. Enova partners with Republic Bank & Trust on its lending products.
In addition to withdrawing funds from customer bank accounts without consent, including withdrawing funds from accounts owned by the customer but for which the customer had not authorized withdrawals, Enova operating as CashNetUSA or NetCredit also cancelled promised loan extensions and withdrew unauthorized amounts from customer bank accounts.