Bank of America agrees to pay $2M over customer recorded calls

(FILES) This August 19,2011 file photo shows a Bank of America sign seen outside a bank branch in Arlington, Virginia, on August 19, 2011. Troubled US financial giant Bank of America said August 29, 2011 it will sell about half of its 10 percent stake in China Construction Bank for approximately $8.3 billion in cash. The sale will help BofA strengthen its capital base and move closer to the Basel III standards imposed by global regulators, said Bank of America, which has suffered a steep decline in its share price in recent weeks. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

SAN DIEGO – Bank of America will pay nearly $2 million to settle a lawsuit alleging it violated state law by failing to timely disclose its automatic recording of phone calls with members of the public, San Diego County District Attorney Bonnie Dumanis announced Tuesday.

Under the terms of the court-approved judgment, which was entered without admission of liability, Bank of America will pay civil penalties totaling $1,635,000, and will reimburse the prosecutors’ investigative costs of $240,000.

Dumanis said her Consumer Protection Unit worked with similar units of the Los Angeles, Riverside, Ventura and Alameda District Attorneys’ Offices to reach the settlement.

The San Diego County District Attorney’s Office will receive $327,000 of the civil penalties and $48,000 of the costs.

In addition to the penalties and investigate costs, Bank of America will contribute $100,000 to the statewide California Consumer Protection Prosecution Trust Fund to support further investigation and enforcement of consumer rights cases in California.

Laws in California regarding recording phone calls are more stringent than in many other states. In California, each party to a confidential conversation must be advised at the outset if a call is being recorded so that any party can object or terminate the call if he or she does not wish to be recorded.

“Preserving our right to privacy is among the greatest challenges we face in the digital age,” Dumanis said. “Our office is committed to protecting California’s consumers from intrusions and privacy violations in the marketplace.”

Once notified by the prosecutors’ offices of the alleged deficiencies in their recording disclosures, Bank of America worked cooperatively to implement changes in the bank’s policies nationwide, without admitting liability, according to the district attorney.

As part of the settlement agreement, Bank of America must comply with California’s standards for recording confidential communications between the bank and its customers by making a clear, conspicuous and accurate disclosure to consumers about the recording at the beginning of any such communication.

Bank of America has also agreed to implement an internal compliance program to ensure that the policy changes are made.