NEW YORK, July 15 ― Two US agencies fined Bank of America a total of US$225 million (RM1 billion) on charges it wrongfully froze unemployment and other public benefit programs at the height of the Covid-19 pandemic.
The Consumer Financial Protection Bureau imposed a US$100 million penalty on Bank of America (BofA) for “botching” the disbursement of state unemployment programs during Covid-19, the agency said.
“Bank of America (BofA) automatically and unlawfully froze people's accounts with a faulty fraud detection programme, and then gave them little recourse when there was, in fact, no fraud,” the agency said in a news release.
The Office of the Comptroller of the Currency fined BofA US$125 million for “violations of law and unsafe or unsound practices” in the bank's administration of public benefits programs.
The agencies also required the US bank to provide payments to those wrongfully deprived payments.
The consumer agency said BofA during the pandemic altered its practices for investigating debt card fraud, replacing a “reasonable” investigation with a fraud filter system that automatically triggered an account freeze.
The bank further “made it very difficult” for people to unfreeze the accounts, the agency said.
“The bank failed these prepaid cardholders by denying them access to their mandated unemployment funds during the height of the pandemic, and leaving these vulnerable consumers without an effective way to remedy the situation,” said OCC Acting Comptroller Michael Hsu.
Bank of America defended its role during the pandemic, saying it facilitated payments of more than US$250 billion in pandemic funds to more than 14 million people.
Government pandemic programs “created unprecedented criminal activity where illegal applicants were able to get states to approve tens of billions of dollars in payments,” a BofA spokeswoman said. ― AFP