Federal authorities imposed a $225 million penalty on Bank of America.
Bank of America has been fined $225 million by federal regulators for allegedly handling unemployment benefits improperly during the COVID-19 outbreak.
The Consumer Financial Protection Board (CFPB), as well as the Office of a Comptroller of the Currency (OCC), have accused Bank of America of inappropriately blocking prepaid cards for thousands of people who applied for unemployment benefits during the epidemic.
Prepaid unemployment benefit debt cards will be administered by Bank of America under agreements with twelve states. According to the CFPB, the bank’s automated fraud filter resulted in thousands of cardholders having accounts unlawfully blocked.
Federal authorities said that Bank of America’s contact centres were understaffed, forcing customers to wait hours on hold while trying to resolve the issue. They claimed that this made it impossible for consumers to unfreeze their cards.
When the pandemic struck, “taxpayers depended on banks to deliver critical finances to families & small businesses to save the economy from collapse,” said Rohit Chopra, director of the Consumer Financial Protection Bureau. “Bank of America did not uphold its legal responsibilities. And rather than stepping up when it felt overwhelmed, it stepped back.
In response to the accusations, Bank of America stated that it was the responsibility of the states to examine and approve applications and give orders for the corporation to make payments.
According to a statement given to FOX Business, “Bank of America’s help to the states enabled the government to effectively issue more than $250 billion for pandemic unemployment benefits to even more than 14 million individuals and distributed to much more pandemic relief to Americans than some other bank.” In addition, by postponing mortgage, credit card, and other payments, we helped millions more people.
The government was aware that the pandemic’s increased unemployment had led to “extraordinary criminal behaviour where unlawful applicants were authorised for billions in payments,” according to Bank of America, but these transactions nevertheless went on.
According to the corporation, “Bank of America collaborated with our state clients to uncover and combat fraud throughout the epidemic.” For instance, we helped California detect hundreds of thousands of questionable cards and helped the state safeguard billions of dollars by working with them.
In addition to the fines, Bank is currently subject to consent orders from the OCC the CFPB requiring it to review its practises and remedy flaws, a lengthy process. In accordance with these orders, Bank of America is required to develop a remediation plan in order to identify consumers who have been injured and calculate the amount of debt that has to be recovered.
