US regulators fine Bank of America $225m

The Consumer Finance Protection Agency (CFPB) has fined Bank of America (BoA) $ 100 million for “failing” state unemployment payments during the heyday of the pandemic.

CFPB fines BoA $ 100 million

“Bank of America automatically and illegally freezes people’s accounts with a fraud detection program, and if it weren’t actually fraudulent, it was almost unreliable,” says CFPB.

“Taxpayers relied on banks to distribute the money they needed to their families and small businesses to prevent the economy from collapsing in the event of a pandemic,” said Rohit Chopra, director of CFPB. I am.

“Bank of America was unable to fulfill its legal obligations, and when it was overwhelmed, it stepped back instead of stepping up.”

The CFPB added during the investigation that Bank of America discovered that it had engaged in “unfair and abusive acts and practices” and that Californians did not receive unemployment benefits during the pandemic.

Specifically, the CFPB points out that banks:

• Instead of conducting a “reasonable investigation”, we implemented a rogue fraud filter with a simple set of flags that automatically triggers an account freeze.
• Leaving the suffering customer “in a hurry”. People with prepaid debit cards for unemployment insurance benefits have a hard time reporting online or directly at a bank branch, even though the bank is said to have agents 24 hours a day, 7 days a week. I did.
• Handed over money to an “overwhelmed” state agency.

As part of the enforcement action, the CFPB said the BoA would need to provide relief to the customer along with a lump sum damages and pay the CFPB a $ 100 million fine, depositing in the victim relief fund. It states that.

As another order, the Office of the Comptroller of the Currency (OCC) has stated that “law violations and unsafe or unhealthy practices related to the management of banks’ prepaid card programs for distributing unemployment insurance and other public institutions”. The bank has been fined $ 125 million. Payment of benefits “.

The OCC has also ordered banks to “provide relief to victims who have been denied or delayed access to unemployment benefits.”

The OCC penalty will be paid to the US Treasury.

Headquartered in Charlotte, North Carolina, with approximately 4,100 branches and $ 2.5 trillion in consolidated assets, BoA is the second largest bank in the United States.

Previously, it was approved by the CFPB in 2014 and ordered to pay $ 727 million in relief to victims of illegal card practices. In May 2022, he was ordered to pay a civil penalty of $ 10 million for illegal ornaments.