Bloomberg News reports that the Bank of America Corp. attracted a fine of $225 million imposed by regulators. The bank had to shell out the fine for deceptive practices related to a prepaid card program. The card program was introduced to distribute unemployment insurance and various public benefit payouts amidst the coronavirus-driven pandemic.
What’s more?
The Office of the Comptroller of Currency gave orders to the bank to pay up $125 million and extend remediation to those consumers adversely affected by the practices, as per a statement released Thursday by the regulator. California and New Jersey were among the 12 states to which the card program was extended.
The Consumer Financial Protection Bureau also imposed a fine on the company of $100 million. The Bureau accused Bank of America of carelessly disbursing benefits related to unemployment benefits when the pandemic was at its peak. The CFPB said that it had ordered the bank to reimburse consumers.
The CFPB separately said in a statement that the Bank of America had unlawfully and automatically frozen people’s accounts with some faulty fraud detection program and then extended minimal recourse when there was no fraud.
Bloomberg News reports that states had hired Bank of America for the administration of unemployment payments and that it was the responsibility of the states to review and approve applications and directs the company accordingly for issuing the funds. This was stated by William Halldin, the spokesperson of BofA, in an email statement.
North Carolina-based Bank of America’s shares dropped 2.4% to $30.10 in New York at 3:08 pm and slid 32% in the current year.
According to OCC, it detected deficiencies in the bank’s program’s administration, including areas like internal controls, operational processes, and risk management. Starting in 2020, the resulting deficiencies led to violation of laws and inflicted harm to the consumers.
It was also found that the bank managed to fail the prepaid cardholders and denied access to them to the mandated unemployment funds when the pandemic was at its peak. This caused consumers to become vulnerable and was not doled out an effective way of finding a remedy to the situation. This was stated by Michael Hsu, the acting Comptroller of Currency.
The Bank of America revealed that there was an acknowledgment from the government that during the pandemic, the unemployment benefits program led to criminal activity in which many applicants were successful in getting the states to approve billions of dollars as payments. However, the company revealed that it had worked in tandem with the states, especially California, so fraud could be identified throughout the Coronavirus-led pandemic.
