Federal Regulators Penalizes Bank of America Over Botched Disbursement Unemployment Benefits

Regulators for unfair and deceptive practices slapped a fine of $225 million on Bank of America Corp BAC related to a prepaid card program to distribute unemployment insurance and other public-benefit payments at the height of the pandemic.
The Office of the Comptroller of the Currency ordered BAC to pay $125 million and provide remediation to consumers harmed by the practices.
The card program served 12 states.
The Consumer Financial Protection Bureau also fined $100 million, accusing the bank of “botching the disbursement of state unemployment benefits at the height of the pandemic.” The order would require consumers to be reimbursed, the Bureau noted.
“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 CFPB said.
The OCC said it found other deficiencies in the bank’s program administration, including operational processes, risk management, and internal controls. Starting in 2020, the deficiencies resulted in law violations and harm to consumers, it said.
Price Action: BAC shares closed at $30.13 on Thursday.
Photo by Okan Caliskan from Pixabay