Bank of America (NYSE:BAC) has recently been directed by the Consumer Financial Protection Bureau (CFPB) to pay a penalty of $250 million. This penalty arises from allegations that the bank opened credit card accounts without obtaining appropriate customer consent. Additionally, it was accused of charging fees twice and withholding rewards that were initially promised to credit card users.
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Of the total penalty amount, $100 million is designated for compensation to customers who were harmed. Additionally, BAC is anticipated to remit $90 million to the CFPB and another $60 million to the Office of the Comptroller of the Currency.
Accusations on BAC
According to the regulator, one of the illegal instances pertains to BofA imposing a $35 fee on customers when a transaction was declined due to insufficient funds in their accounts. The CFPB discovered that the bank repeatedly charged this fee for the same transaction between 2018 and 2022.
In addition, the regulator found that BAC’s employees resorted to the illegal practice of enrolling consumers in credit-card accounts without their consent, with the aim of meeting incentive goals. This unauthorized enrollment of customers has taken place since 2012. The CFPB has stated that these incentive goals have been eliminated by the bank as of the beginning of 2023.
CFPB Director Rohit Chopra said, “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Is BAC a Good Buy Right Now?
Ahead of BofA’s second-quarter earnings release scheduled for July 18, Jefferies analyst Ken Usdin reiterated a Hold rating on BAC stock but lowered the price target to $30 from $33.
According to the analyst consensus, BAC is a Moderate Buy based on eight Buy, six Hold, and two Sell ratings. The average Bank of America stock price target is $34.39, implying 18.5% upside potential.
Investors looking for BAC’s most accurate and profitable analyst could follow Credit Suisse analyst Susan Roth Katzke. Copying the analyst’s trades on this stock and holding each position for one year could result in 69% of your transactions generating a profit, with an average return of 31.37% per trade.
