Regulators Fine Bank of America $225 Million Over Prepaid Card Program for Unemployment Benefits
July 14 2022 - 3:30PM
Dow Jones News
By Michael Dabaie
Federal regulators said they fined Bank of America $225 million
over disbursement of state unemployment benefits during the
pandemic.
The Office of the Comptroller of the Currency said Thursday it
assessed a $125 million civil money penalty against Bank of America
N.A., alleging violations relating to the bank's administration of
a prepaid card program to distribute unemployment insurance and
other public benefit payments.
At the same time, the Consumer Financial Protection Bureau said
it fined Bank of America $100 million, saying the company botched
the disbursement of state unemployment benefits at the height of
the pandemic.
The bank administered the Unemployment Benefits Prepaid Card
Program on behalf of 12 states. The OCC said the bank failed to
adequately investigate and resolve consumer claims of unauthorized
transactions. The OCC said it also found other deficiencies in the
bank's administration of the program, including in operational
processes, risk management, and internal controls. Beginning in
2020, these deficiencies resulted in violations of law and harm to
consumers, OCC said.
"Bank of America was hired by states to administer unemployment
payments and the states were responsible for reviewing and
approving applications and directing us to issue payments. Bank of
America's support to the states enabled the government to
successfully issue more than $250 billion in pandemic unemployment
benefits to more than 14 million people and overall distributed
more pandemic relief to Americans than any other bank," Bank of
America said in a statement. "In addition, we provided assistance
to millions more by deferring mortgage, credit card and other
payments."
The CFPB said in a statement that "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."
The order requires the bank to provide remediation to consumers
whose access to unemployment benefits was denied or delayed. The
order also requires the bank to take corrective action to improve
its risk management and oversight, OCC said.
"This action arose despite the government's own acknowledgement
that the unemployment program expansion during the pandemic created
unprecedented criminal activity where illegal applicants were able
to get states to approve tens of billions of dollars in payments,"
Bank of America said.
Write to Michael Dabaie at michael.dabaie@wsj.com
(END) Dow Jones Newswires
July 14, 2022 15:15 ET (19:15 GMT)
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