RSSFederal regulators fined Bank of America $225 million for mishandling the distribution of pandemic unemployment dollars and other public benefits.
The fines included a $100 million penalty from the Consumer Financial Protection Bureau and $125 million civil fine from the Office of the Comptroller of the Currency.
According to regulators, the $2.5 trillion Bank of America automatically and illegally froze customer accounts through a defective fraud detection program during the pandemic, then gave impacted customers little recourse when no fraud was found. As reported by The Wall Street Journal, Bank of America administered the unemployment benefits prepaid card program in 12 states but has since exited the business in all but California. The bank reportedly issued more than $250 million in unemployment benefits to 14 million Americans.
“Instead of conducting reasonable investigations, it implemented a fraud filter with a simple set of flags that automatically triggered an account freeze,” the CFPB stated. “This set a low bar to freeze the unemployment insurance benefits of many people, harming thousands of legitimate cardholders needing the money.”
The agencies also ordered the $2.5 trillion bank to repay customers who were wrongly denied benefits. The CFPB ordered Bank of America to provide each impacted customer with a “lump sum consequential harm repayment,” and offered customers additional redress through individual reviews. The OCC ordered the bank to improve its risk management and oversight of the program.
“Banks must pay attention to the financial health of their customers and conduct their activities in accordance with all consumer protection laws,” said Acting Comptroller of the Currency Michael Hsu. “When they don’t, we will act accordingly.”
