Bank of America, N.A.
On July 14, 2022, the Bureau issued an order against Bank of America, N.A., which is a national bank headquartered in Charlotte, North Carolina with branches and ATMs located in 38 states and the District of Columbia. Since 2020, Bank of America had contracts with 12 states, including California, to deliver unemployment insurance and other government benefit payments to consumers through prepaid debit cards. The onset of the COVID-19 pandemic in March 2020 led to a surge in consumers seeking unemployment insurance benefits. In the fall of 2020, and continuing through mid-2021, Bank of America changed its practices for investigating prepaid debit cardholder notices of error to solely rely on an automated fraud filter, which it knew or should have known would incorrectly determine that no error had occurred and which led to its incorrectly freezing or blocking accounts. The Bureau found that Bank of America engaged in unfair acts or practices by denying prepaid debit cardholders’ notices of error and freezing their prepaid debit card accounts based solely on the results of the Bank’s flawed fraud filter. The Bank also engaged in abusive acts or practices by retroactively applying its fraud filter to deny notices of error submitted by prepaid debit cardholders that it had previously investigated and paid. Further, Bank of America engaged in unfair acts and practices by impeding unemployment insurance benefit prepaid debit cardholders’ efforts to file notices of error concerning their prepaid debit card accounts. The Bank’s failure to conduct a reasonable investigation of prepaid debit cardholders’ notices of error and failure to timely investigate and resolve prepaid debit cardholders’ error claims also violated the Electronic Fund Transfer Act and its implementing Regulation E. The Bureau’s order requires Bank of America to redress harmed consumers who suffered hundreds of millions of dollars in direct and consequential financial harm; harmed consumers will also be eligible to receive additional remediation through an individualized review process. The Bank must also review and reform its unemployment insurance benefit prepaid debit card program and pay a $100 million civil penalty to the Bureau. The OCC concurrently issued an order against the Bank separately fining it $125 million.
Federal Regulators Fine Bank of America $225 Million Over Botched Disbursement of State Unemployment Benefits at Height of Pandemic