Bank of America has been fined $225 million for 'botching' unemployment benefit payments during the pandemic

Bank of America has been fined $225 million for "botching" payments of unemployment benefits.
It froze some accounts after incorrectly flagging them as fraudulent, two federal agencies said.
BoA also made it difficult for people to unfreeze their cards, CFPB said.

Bank of America has been fined $225 million by two federal agencies for "botching" payments of unemployment benefits during the pandemic. Some people's accounts were frozen after it incorrectly flagged them as fraudulent, they said.

The bank was fined $100 million by the Consumer Financial Protection Bureau (CFPB) and $125 million by the Office of the Comptroller of the Currency (OCC) on Thursday.

"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," CFPB said.

Under contracts with 12 states, including California, Michigan, and New Jersey, Bank of America issued benefit payments including unemployment insurance to consumers, some of which was through prepaid debit cards. Though the bank administered the payments, it said that the states were responsible for reviewing and approving applications and directing it to issue payments.

CFPB said that its investigation found that the bank had engaged in "unfair and abusive acts and practices" that cut some people in California off from their unemployment benefits.

It said that Bank of America introduced a "faulty" fraud filter in fall 2020 that automatically froze accounts if certain criteria were met. "This set a low bar to freeze the unemployment insurance benefits of many people, harming thousands of legitimate cardholders needing the money," it said.

CFPB also said that the bank made it "very difficult" for people to unfreeze their cards or report fraudulent use by not letting them submit reports online or in person at bank branches.

OCC similarly said that the bank had caused people to lose access to their unemployment benefits by failing to reimburse consumers for unauthorized transactions quickly and by "wrongfully" freezing and blocking prepaid card accounts.

CFPB ordered the bank to pay back money wrongly denied because of the fraud filter, as well as provide affected consumers with a lump sum payment and pay a fine of $100 million to the CFPB, which it said would be deposited into the victims relief fund.

"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," a Bank of America spokesperson told Insider.

"Bank of America partnered with our state clients to identify and fight fraud throughout the pandemic.

"For example, we worked with California to identify hundreds of thousands of suspicious cards and assisted the state in protecting billions of dollars," the spokesperson added.

The spokesperson said the bank helped the 12 states states issue more than $250 billion in pandemic unemployment benefits to more than 14 million people.

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Contributer : Business Insider https://ift.tt/YKrVJ5j

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