Two U.S. agencies fined Bank of America a total of $225 million for unfairly freezing unemployment and other charitable programs at the height of the Covid-19 pandemic.
The Consumer Financial Protection Bureau fined Bank of America (BofA) $100 million for “botched” state unemployment program payouts during Covid-19, the agency said.
“Bank of America (BofA) automatically and unlawfully frozen the accounts of individuals with flawed fraud detection programs and then gave them little recourse when, in fact, no fraud had occurred,” the agency said in a press release.
The Office of the Comptroller of the Currency fined BofA $125 million for “violations of the law and unsafe or unsound practices” in the bank’s administration of public benefit programs.
Authorities also asked the US bank to make payments to these wrongfully withdrawn payments.
The Consumer Protection Agency said BofA changed its credit card fraud investigation practices during the pandemic, replacing an “adequate” investigation with a fraud filtering system that automatically triggered an account freeze.
The bank made it “very difficult” for people to unblock accounts, the agency said.
“The bank failed these prepaid cardholders by denying them access to their mandated unemployment benefits during the height of the pandemic and leaving these vulnerable consumers without an effective means of redress,” said OCC Acting Comptroller Michael Hsu.
Bank of America defended its role during the pandemic, saying it has facilitated payments of more than $250 billion in pandemic funds to more than 14 million people.
Government pandemic programs “have created unprecedented criminal activity, where illegal applicants have been able to trick states into approving tens of billions of dollars in payments,” a BofA spokeswoman said.
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