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What sets Varo apart from other banks: Our response to Bank of America’s recent fines

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Banks are supposed to be trusted custodians of our hard-earned money that we can rely on to act in a fair, ethical, and transparent manner for our financial benefit. Unfortunately, not all banks adhere to ethical practices or have their customers’ best interests in mind. 

Recently, Bank of America found itself in hot water, facing severe financial penalties for engaging in illegal practices including “double-dipping” on overdraft fees, withholding reward bonuses on credit cards, and opening accounts without proper customer consent.¹

Here, we’ll examine what went wrong with Bank of America’s unethical behavior and how Varo takes a drastically different approach as a trusted partner to its customers.

Why is Bank of America in hot water?

Regulators recently determined that Bank of America had engaged in illegal actions that were deceptive and unfair, exploiting customers for financial gain.

Firstly, the bank allegedly charged customers undisclosed or unauthorized overdraft fees. According to the Consumer Financial Protection Bureau (CFPB), Bank of America engaged in a "double-dipping scheme" to "harvest junk fees" from its customers, charging them $35 in overdraft fees when they didn’t have enough funds available. Even worse, they repeatedly charged customers fees for the same transaction.²

The bank also offered customers cash rewards and bonus points when signing up for a credit card, yet the CFPB said they illegally withheld many of these promised credit card account bonuses.¹

Additionally, similar to the recent high-profile scandal surrounding Wells Fargo, Bank of America employees engaged in the opening of fake or unauthorized accounts to meet sales targets and inflate performance metrics. The CFPB found that, since at least 2012, the bank’s employees illegally applied for and enrolled consumers in credit card accounts without their knowledge or consent.¹

As a consequence of these illegal and unethical practices, Bank of America has been deemed responsible for returning the ill-gotten fees to affected customers and paying significant penalties. The bank must refund $100 million to its affected customers, pay $90 million in penalties to the CFPB, and $60 million to the Office of the Comptroller of the Currency (OCC). Combined, this represents one of the highest financial penalties in years against Bank of America.¹

A violation of customer trust

As Varo Founder and CEO Colin Walsh recently said, "For too long, the banking industry has ignored Americans who are living paycheck to paycheck. We hope these regulatory actions will serve as a wake up call to the industry to cut these fees and act more transparently and ethically to put customers first.”

Bank of America’s practices not only violated consumer protection regulations, but also resulted in customers facing unnecessary financial burdens. These practices don’t just exploit customers, they can also erode their overall confidence in the banking system.

Fortunately, regulatory bodies and authorities are actively monitoring the activities of financial institutions to ensure that they operate within legal and ethical boundaries.

For Bank of America, these penalties constitute a significant financial consequence, sending a strong message that there are severe repercussions for engaging in illegal or unethical practices. 

While the bank has publicly acknowledged these violations and expressed its commitment to rectifying the situation, this nevertheless serves as a reminder of the vital importance of transparency, customer protection, and ethical behavior within the banking industry.

Why Varo is different

At Varo, we believe that banks should focus on building trust, providing excellent customer service, and ensuring that their practices align with legal and ethical standards. Only through these efforts can banks gain the trust and confidence of the public as responsible custodians of their financial well-being.

We operate with a customer-first mentality and understand the importance of transparent fee structures in an effort to empower our customers to make informed decisions about their finances.

We believe your hard-earned money is your money, and we want to help you keep it that way. That’s why we offer a no hidden fee bank account with no overdraft fees. Our bank account has built-in guardrails that only let you spend what you have, and if you do go over, there is no extra charge.³

The way Walsh puts it, “Whether or not you’ve overdrafted once in your life—or multiple times—there is no doubt that the practice of paying a fee for being short on funds for a few days doesn’t feel right. While we have come to just accept that this is how banking is, it doesn’t have to be.”⁴

We believe in placing our customers at the center of all our operations, actively listening to feedback and using it to improve our services continuously. By prioritizing the needs and concerns of our customers, we strive to build trust and establish long-lasting relationships.

Varo’s unwavering commitment to ensuring customers have full control over their accounts and financial well-being means we will never resort to deceptive tactics that compromise our customers' trust. Customers deserve honest and fair treatment, and it's our promise to deliver just that.

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.

¹ As found on July 11, 2023 on

² As found on July 11, 2023 on

³ We will decline or return transactions when you do not have enough money in your account to cover the charge. However, you could still end up with a negative balance if, for example, a transaction is approved for one amount, but then the actual charge is more than what you have in your account (like when you add a tip at a restaurant after the transaction for the meal was already approved). This could also include preauthorized ACH transfers that are scheduled, recurring and/or pending but have not yet settled. If your account balance remains negative, activity will be evaluated and your account could be closed. Even if you have a negative balance, we will not charge you an overdraft fee.



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