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Bank of America Corporation NYSE:BAC NYSE Common Stock
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Regulators Fine Bank of America $225 Million Over Prepaid Card Program for Unemployment Benefits

14/07/2022 8:30pm

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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)

Copyright (c) 2022 Dow Jones & Company, Inc.

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