NEW YORK (AP) -- Bank of America Corp. said Tuesday it lost $7.65 billion during the third quarter due to a charge related to credit and debit card reform legislation passed over the summer.

The bank also announced a change in its consumer banking strategy to focus on providing customers with incentives to do more business with the bank instead of generating revenue through penalty fees such as overdraft charges. The bank is already starting to implement some changes, and has cut overdraft fees on small amounts that customers charge to their debit cards.

"Customer scores have improved, complaint volumes are down," CEO Brian Moynihan said on a conference call with analysts to discuss earnings.

The new legislation that caused Bank of America to take the $10.4 billion charge limits fees banks can collect when merchants accept debit cards. BofA said that change would reduce future revenues in its card business.

Excluding the one-time charge, Bank of America earned $3.1 billion, or 27 cents per share, in the three months ending in September. That easily topped the 16 cents per share analysts polled by Thomson Reuters were expecting. Analysts don't typically include special charges in their estimates. BofA's shares fell 54 cents, or 4.4 percent, to close at $11.80 amid a broad market decline.

The better-than-expected results were due mainly to a sharp drop in losses tied to defaulting loans. The bank set aside $5.4 billion to cover bad loans during the third quarter, compared with $11.71 billion during the same quarter last year. JPMorgan Chase & Co., which reported results last week, also benefited from a big drop in losses from failed loans.

BofA has already started introducing components of its new strategy. For instance, it offers free checking to customers who use its "eBanking" channel or solely use online banking. The bank plans to begin testing new offerings in December that will reward customers for using certain kinds of banking products or keeping higher balances.

A drop in defaults is a sign that customers could be regaining their financial footing after the recession, which led to widespread defaults on mortgages, home equity loans and credit cards.

Bank of America and other banks have been stung in recent weeks by accusations that they failed to properly review documents used in foreclosures. Bank of America had halted foreclosures in all 50 states, but said Monday that it would resume foreclosure proceedings in 23 states after reviewing cases there.

CEO Moynihan said it would take three to five weeks for the bank's employees to review the documents and restart the foreclosure process.

Including the special, non-cash charge this quarter, Charlotte, N.C.-based Bank of America lost $7.65 billion, or 77 cents per share. In the third quarter of last year, BofA reported a loss of $2.2 billion applicable to common shareholders, or 26 cents per share.