July 18, 2022: -Bank of America was fined $225 million for “botching the disbursement of state unemployment is beneficial at the height of the pandemic,” the subject of a CNBC investigation in the previous year.
The Consumer Financial Protection Bureau is fining the firm $100 million, and, in a particular order, the Office of the Comptroller of the Currency has fined the bank $125 million. The order needs Bank of America to be engaged in a process that will provide restitution for consumers whose accounts were frozen for what the CFPB known as a “faulty fraud detection program.” On Thursday, both fines were announced.
“The bank failed the prepaid cardholders by denying them permission to their mandated unemployment funds in the height of the pandemic and leaving the vulnerable consumers without an effective way to cure the situation,” said the Acting Comptroller of the Currency Michael Hsu.
“Banks are paying attention to the financial health of their customers and conduct their activities following all consumer protection laws,” he added.
Bank of America had contracts with nearly 12 state agencies to provide unemployment and benefit payments through prepaid debit cards. These cards targeted fraud when the pandemic hit and the unemployment rate surged in 2020. It has just one, California, which extended the relationship.
The bank said that “the states were accountable for reviewing and accepting applications and directing to issue payments.” As such, Bank of America said it supports the government “successfully issue more than $250 billion in pandemic unemployment benefits to over 14 million people and distributed more pandemic relief to Americans than any other bank.”
“This action arose despite the government’s acknowledgment that the unemployment expansion during the pandemic created an unprecedented criminal activity where the people who are not allowed were able to get states to accept tens of billions of dollars in payments,” Bank of America said, and further said that it “partnered with the state clients to identify and fight fraud in the pandemic.”
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