Federal regulators fined Bank of America $225 million

Federal regulators They imposed a $225 million fine on Bank of America over what they claimed were deficiencies in how the bank handled unemployment benefits during the COVID-19 pandemic.

The Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) accused the Bank of America of improperly freezing prepaid cards for thousands of people seeking unemployment benefits. during the pandemic.

American bank It contracted with twelve states to administer prepaid unemployment benefit debt cards. The bank had an automatic fraud filter, which – according to the CFPB – improperly frozen the accounts of thousands of cardholders.

Federal regulators accused Bank of America of making it difficult for people to unfreeze their cards, alleging that the company’s call centers did not have enough staff, requiring people to spend hours waiting trying to solve the problem.

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“Taxpayers relied on banks to distribute needed funds to families and small businesses to save the economy from collapse when the pandemic hit,” said Rohit Chopra, director of the CFPB. “Bank of America failed to meet its legal obligations. And when it swamped, rather than ramped up, it backed down.”

Bank of America responded to the allegations, saying that states are responsible for reviewing and approving applications and directing the company to issue payments.

“Bank of America’s support for states has enabled the government to issue more than $250 billion in pandemic unemployment benefits to more than 14 million people and has been distributed more generally to pandemic relief to Americans than other banks,” a company spokesperson said in a statement. Statement submitted to FOX Business. In addition, we’ve helped millions more by deferring mortgage, credit card, and other payments.

Bank of America said these transactions continued despite the government’s realization that expanding unemployment during the pandemic had created “unprecedented criminal activity as billions of dollars in payments to illegal applicants were approved.”

“Bank of America has partnered with our government clients to identify and combat fraud during the pandemic,” the company said. “For example, we worked with California to identify hundreds of thousands of suspicious cards and helped the state protect billions of dollars.”

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In addition to fines, Bank of America now faces approval orders from the OCC and CFPB that direct the bank to reform its policies and address deficiencies — a process that has been in place for years. In accordance with these orders, Bank of America has been directed to develop a remedial plan to identify affected consumers and determine the amount of debt to be repaid.