Bank of America controversies

Bank of America controversies

Bank of America has been involved in several controversies and received a wide variety of public criticism. This page details some of the more notable and public issues.

Criticism of policies

Account closures without warning

When opening a deposit account at Bank of America, the customer signs a signature card which also acts as an agreement between the customer and Bank of America. The signature card states "the written information we give you is part of this agreement and tells you the current terms of our deposit accounts" and that the agreement can be changed at any time. [ [ Bank of America Deposit Agreement] ] Bank of America's policy is to provide the customer with the Deposit Agreement when the account is opened, as well as addenda to the Deposit Agreement in statement inserts. However, if an employee fails to provide the Deposit Agreement, or if the customer fails to read it, a new customer may enter into a contractual agreement with Bank of America without knowing its terms, which includes the right of Bank of America to close a customer's account without warning. Some have criticized this process, as there is no verification that the bank makes full disclosure of this information, or that the customer received the information.

In 2000, a California customer was awarded just over $227,000 in damages following a suit against the now-defunct BankAmerica (that is, the California corporation that existed prior to the NationsBank merger that created the modern day Bank of America). The case turned on an event where the bank closed the customer's accounts without advanced warning and returned several checks marked "insufficient funds" or "account closed." The jury concluded that although BankAmerica had the "right" to close the account (as the customer in question had unclean hands), it had "breached the covenant of good faith and fair dealing" by doing so without warning and then by leading the check recipients to believe the customer had written bad checks, when in fact it was BankAmerica's conduct that prevented the checks from clearing. [ [ California Court of Appeal Decision] ]

Excessive overdraft fees

In 1999, a class action lawsuit was filed against NationsBank (one of Bank of America's predecessor organizations) for engaging in the practice of "biggest check first" check-clearing without disclosing this to their customers. Put simply, the bank clears checks and ATM/debit card transactions in order from largest to smallest, without regard to other factors. The plaintiffs in the lawsuit claimed that this posting method wasn't disclosed to customers. The "biggest check first" policy is not unique to Bank of America, and is common among other large U.S. banks. Some banks argue that this practice is intended to benefit customers by ensuring that the most important checks, such as mortgage payments, are paid.cite news | title = NationsBank settles suit | publisher = CNN Money |date=1999-11-10 | url = | accessdate = 2008-01-14 ] NationsBank paid a $9M settlement and the lawsuit was dismissed without an admission of fault. NationsBank did not change its policy as a result of the lawsuit.

In 2005, The Boston Globe published an internal memorandum sent to Bank of America banking centers. This memo instructed banking centers to reduce the number of overdraft fee refunds being granted particularly for customers who repeatedly incur such fees. The memo also advised that those branches refunding the most fees per market would receive coaching. [cite news | title = Bank gets tough on overdraft fee refunds | publisher = The Boston Globe |date=2005-08-26 |url = | accessdate = 2008-01-14 ]

MBNA purchase

Bank of America incorporated MBNA's credit card management process as their own as part of the purchase of MBNA in 2006. They also appointed former MBNA CEO Bruce Hammond as president of Bank of America Card Services. Critics, including Martin Bosworth of claim [ [ MBNofA: Bank of America Adopts MBNA's Tactics] ] that the introduction of Bank of America branded MBNA cards has led to Bank of America engaging in the same deceptive business practices that MBNA was also alleged to. [ [ Testimony of Consumer Action before the Senate Committee on Banking, Housing, and Urban Affairs] ]

MBNA was also one of the companies mentioned on a 2004 Frontline PBS special about allegedly malicious business practices by credit card companies. [ [ PBS Frontline - Secret History of the Credit Card] ] Reported practices included changing aspects of the contract without the consent of the customer, doubling or tripling fees and interest rates, changing billing due dates monthly, and invoking universal default on first offenders whose payments were a single day late. For further information and links, see Credit Cards.

Public controversy

ecured credit card program

In February 2007, Bank of America expanded a pilot program from 5 to 51 banking centers in Los Angeles. The pilot program is designed to help people with no credit or poor credit establish a credit history. BOA began marketing their secured credit cards, a pre-existing credit product, as a method of doing this. The controversy stems from the bank policy used to verify the identity of customers. Instead of requiring a Social Security Number, Bank of America accepts applications with a Taxpayer Identification Number, along with two other forms of ID (driver's license, consular ID, passport, etc.) This method of ID verification has been in place since the October 26, 2001 introduction of the USA Patriot Act and is utilized by some banks for new accounts of any type. The acceptance of the Matricula Consular, an ID issued by the Mexican government through its consular office, exists as a major point of this controversy. The Patriot Act neither endorses nor prohibits the use of any consular identification in this fashion. However Congress, when given a previous opportunity to address it on September 14 2004, voted down a motion to prevent financial institutions from accepting consular IDs. [ [ Anti-matrícula proposal defeated] ] New legislation has been submitted recently, however, to address the issue. [ [ Tom Price Congressional Office] ] Critics (Lou Dobbs being the one cited in this article) claim that Bank of America's policy specifically targets immigrants who reside in America illegally. [ [ CNN - Lou Dobbs Transcript] ] Additionally, Fox News commentator Neil Cavuto and Colorado Congressman and 2008 Presidential Candidate Tom Tancredo have argued that the policy could be used by terrorists. Representative Tom Price (GA-06-R) has announced that the Committee on Financial Services will be convening hearings on the methods permitted by the FDIC and Treasury policies applying to verification of the identity of potential customers. [ [ Tom Price Congressional Office] ] [ [,2933,252130,00.html Bank of America's Terror Loophole] ] [ [ Tancredo Says Banks Dangerous New Policy Could Facilitate Money for Would-Be Terrorists] ] [ [,2933,251672,00.html?sPage=fnc.specialsections/immigration Fox News - Report: Bank of America's New Credit Card Targets Illegal Immigrants] ]

Bank of America's Ken Lewis has stated that it would be unfair and discriminatory to turn away anyone with the legally acceptable forms of identification regardless of how controversial the practice.

Matthew Shinnick's arrest

In December 2005, a San Francisco man named Matthew Shinnick was mistakenly arrested at a Bank of America branch when he attempted to negotiate a fraudulent check he received from a buyer responding to a Craigslist ad. cite news | first = David | last = Lazarus | title = Check from a scammer bounces victim into jail | url = | publisher = San Francisco Chronicle | date = 2006-08-30 | accessdate = 2006-10-05 ] After Bank of America declined to pay Mr. Shinnick's legal fees, reported to be $14,000, consumer advocate and radio personality Clark Howard publicized the case on the air. [cite web | first = Clark | last = Howard | url= | title=What happened next... | accessdate=2006-10-05]

Missing computer tapes

According to an story in March 2005, Bank of America lost computer tapes containing information on as many as 1.2 million federal employees, including Senator Patrick Leahy, D-Vt. and other members of the U.S. Senate. Sen. Charles Schumer, D-NY, reported being told that the tapes had likely been stolen from a commercial aircraft by baggage handlers. The tapes contain data including Social Security numbers and account information. The bank issued an apology. A spokesman for the bank said it would be "virtually impossible" for anyone who found the tapes to access the data. [ [ Bank of America loses customer data] ]

Offsetting Social Security benefits

In 2004, a California jury decided that Bank of America had acted illegally with regards to the Social Security benefits of a million customers. The jury awarded damages that could exceed $1 billion. Bank of America had been accused of withholding customers' direct deposit social security benefit payments to cover debts in cases where a debt is owed to the bank by the customer (e.g.: due to an overdrawn account, various service fees, etc.). A prior case (Kruger vs Wells Fargo Bank) established that a bank could not offset a customer's government benefits to collect against a delinquent but separate credit card. In Miller v. Bank of America, the plaintiff argued that the same precedent should prohibit the bank from collecting the balance of an overdrawn deposit account. The trial court's decision and the jury award was overturned on appeal. [ [ Paul Miller v. Bank of America] ]

Online banking security


Sitekey is an additional login step added to the Bank of America online banking website. It is a form of Mutual Authentication. The bank claims this as an added security measure to help reduce the likelihood of phishing attacks by allowing users to easily verify the authenticity of the server to which they are connected. SiteKey has several well-known vulnerabilities, however it is no less secure than the simple username-password requests most banking sites use; at worst, the bank has provided users with a false sense of security. [cite news | first = Christopher | last = Soghoian | title = A Deceit-Augmented Man In The Middle Attack Against Bank of America's SiteKey Service | url = | date = 2007-04-10 | accessdate = 2007-04-12] Whatever its effectiveness, the practice has been recommended for use by all national banks by the Federal Financial Institutions Examination Council. [ [ Authentication in an Internet Banking Environment] ]

Though SiteKey will by no means render Bank of America customers immune to phishing attacks, it demands a two-way exchange of authenticating information: The Web server presents the user its credentials (your chosen image and text) as a means of proving they really are the bank. Only after seeing the image they have chosen, the bank instructs its users, should they, in turn, present their credentials (user ID and passcode).

While the two-way authentication is currently an uncommon function among the consumer banking industry, the recognition of the user's computer, or more accurately, their browser, is still done in the normal way using HTTP cookies. Additionally, an Adobe Flash Local Shared Object is added to the user's computer that stores identifying details of customers, such as log-ins, in a way that is said to prevent most customers from finding or deleting them.

Website redirection weakness

In April 2005, Bank of America was the target of a phishing scheme that exploited a flaw in the online banking website. Normally, a phishing link that accesses an illegitimate website can be detected by carefully reading the URL in the web browser. One URL for the Bank of America website allowed a second URL to be passed to the Bank of America website for redirection. This allowed the phishing link to access an illegitimate website through the Bank of America website and thereby display a "real" Bank of America URL while accessing the illegitimate site. [ [ Bank Of America- 'Online Banking Alert (Change of Email Address)'] ]

Parmalat Bankruptcy

In late December 2003, the Italian dairy and food corporation Parmalat SpA declared bankruptcy. This followed a claim in September of that year that the company held nearly $5B in assets with Bank of America in New York. The bank denied the existence of such an account and an ongoing legal battle ensued over accountability for Parmalat's insolvency. Parmalat Bankruptcy Timeline lists the events chronologically.


Bank of America has a green statement, however, Bank of America invests heavily in coal mining [ [ Citigroup, Bank of America Raked Over Coal] ] which contributes to greenhouse gas production.


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