Bank Of America Has Been FINED 225 Million Dollars

By daily headlines

Bank of America was penalized $225 million by federal regulators for “botching the distribution of state unemployment benefits at the height of the pandemic.”

In a separate decision, the Office of the Comptroller of the Currency is fining the bank $125 million in addition to the $100 million fine imposed by the Consumer Financial Protection Bureau on the company.

“Bank of America automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud,” said the Consumer Financial Protection Bureau (CFPB).

In accordance with the directive, Bank of America must carry out a procedure that would compensate customers whose accounts were blocked due to what the Consumer Financial Protection Bureau (CFPB) dubbed a “faulty fraud detection program.”

“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. “Bank of America failed to live up to its legal obligations. And when it got overwhelmed, instead of stepping up, it stepped back.”

Customers who received unemployment and other benefits using prepaid debit cards were impacted.

States were on the watch for fraud when the COVID-19 pandemic struck in early 2020 and millions of people all around the country registered for unemployment insurance benefits.

CFPB said there was a “significant amount of identity theft” that affected people who were receiving benefits on the cards, specifically in California.”

The organization said that Bank of America altered its procedures for looking into prepaid debit card fraud on jobless accounts during the outbreak.

They said that “Instead of conducting reasonable investigations, it implemented a fraud filter with a simple set of flags that automatically triggered an account freeze, This set a low bar to freeze the unemployment insurance benefits of many people, harming thousands of legitimate cardholders needing the money.”

Thursday, the fines were both announced.

Acting Comptroller of the Currency Michael Hsu said, “The bank failed these prepaid cardholders by denying them access to their mandated unemployment funds during the height of the pandemic, and leaving these vulnerable consumers without an effective way to remedy the situation, Banks must pay attention to the financial health of their customers and conduct their activities in accordance with all consumer protection laws.”