The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have imposed $225 million in fines against Bank of America for “botching” the disbursement of state unemployment benefits in 2020 and 2021 during the “height” of the COVID-19 pandemic.
A copy of the Consent Order can be accessed by clicking here.
Along with paying the regulators $225 million — $100 million to the CFPB and $125 million to the OCC — Bank of America must also pay back the money that was denied and pay a “lump sum consequential harm payment” to consumers that will be based on the degree of harm they suffered.
For more than a decade, BofA has had contracts with state governments to deliver unemployment and other benefit payments to consumers via prepaid debt cards and accounts. In 2020, the bank changed its practices for how it investigated and detected fraud on unemployment insurance benefit accounts by implementing a set of flags that would automatically freeze an account when triggered. The problem, according to the CFPB, is that this set a “low bar” for accounts to be frozen and left “thousands” of legitimate cardholders unable to access their money. The bank also made it “very difficult” for people to have their cards unfrozen because they could only do so over the phone, and consumers were often on hold for hours waiting to talk to a customer service agent.
In keeping with its objective of going after repeat offenders, the CFPB noted that Bank of America was ordered back in 2014 to pay $727 million to pay back victims of illegal credit card practices, and that the bank was fined $10 million earlier this year over unlawful garnishments.
“Taxpayers relied on banks to distribute needed funds to families and small businesses to rescue the economy from collapse when the pandemic hit,” said CFPB Director Rohit Chopra in a statement. “Bank of America failed to live up to its legal obligations. And when it got overwhelmed, instead of stepping up, it stepped back.”
