CFPB accused the US lender of unlawfully blocking accounts of eligible customers from availing unemployment and other public benefit programmes during the peak of the Covid-19 pandemic
Bank of America branch in Los Angeles. (Credit: Coolcaesar/Wikipedia)
The US Consumer Financial Protection Bureau (CFPB) has fined Bank of America $100m for its misconduct related to the disbursement of state unemployment benefits during the pandemic.
According to CFPB, the US lender has unlawfully blocked people’s accounts from availing unemployment and other public benefit programmes during the peak of the Covid-19 pandemic.
The bureau ordered the bank to undertake a redressal process, which is estimated to compensate hundreds of millions of dollars to consumers.
Simultaneously, the Office of the Comptroller of the Currency (OCC) has also imposed a fine totalling $125m on the bank.
CFPB director Rohit Chopra said: “Taxpayers relied on banks to distribute needed funds to families and small businesses to rescue the economy from collapse when the pandemic hit.
“Bank of America failed to live up to its legal obligations. And when it got overwhelmed, instead of stepping up, it stepped back.”
Bank of America had contracts with various state agencies to deliver unemployment insurance and other government benefits to its consumers, electronically through prepaid debit cards and accounts.
CFPB’s investigation found that Bank of America was engaged in unfair and abusive practices that prevented California citizens from not getting their unemployment benefits.
The bank has changed its process of investigating prepaid card fraud related to the unemployment insurance benefit accounts.
It has implemented a fraud filter with pre-set instructions that automatically freezes an account, instead of conducting reasonable investigations.
Also, the bank has made it very difficult for legitimate cardholders who are eligible for unemployment insurance benefits to unfreeze their accounts.
The victims were not allowed to register complaints online, or in person at bank branches, but were often sent to the unemployment department for verification, said CFPB.
Bank of America was previously fined $727m by the CFPB to compensate the victims of its illegal credit card practices in 2014.