Bank of America must compensate customers $125 million for implementing deceptive practices with pandemic benefits

Nearly 100,000 cardholders have been affected.

Photo: Michael V/Shutterstock

Bank of America was fined $225 million for obstructing the distribution of unemployment benefits in the middle of the pandemic. As a result, they are ordering the bank to compensate more than 100,000 people in different states of the country.

The Office of the Comptroller of the Currency (OCC) has ordered the country’s second-largest bank to pay $125 million and compensate customers affected by unfair and deceptive practices related to the prepaid card program.

The Consumer Financial Protection Bureau also fined Bank of America an additional $100 million, accusing it of failing to provide state unemployment benefits at the height of the pandemic.

Bank of America had programs that used largely debit card-like prepaid cards on behalf of 12 states: Arizona, California, Iowa, Kansas, Kentucky, Massachusetts, Maryland, Michigan, New Jersey, Nevada, North Carolina, and the Carolinas. From the south . Carolina, according to the OCC.

The bank was contracted by those states to administer unemployment assistance, but it failed prepaid card holders by denying them access to their unemployment funds.Leaving them with no way to fix the situation, Michael Hsu, acting controller of the OCC, said, according to CBS.

“Bank of America automatically and illegally froze people’s accounts using defective fraud detection software, then gave them little to no remedy when in fact there was no fraud,” Hsu stated.

In addition to the penalties, Bank of America will have to compensate customers for the funds that have been withheld. Nearly 100,000 cardholders have been affected.

Bank of America stated that it attempted to meet its contractual obligations under difficult circumstances.

A Bank of America spokesperson noted that in 2020 and 2021 state systems were mired in fraudulent claims for pandemic benefits, as the pandemic led to unprecedented criminal activity in which illegal claimants were able to persuade states to agree to pay tens of billions of dollars.

Bank of America has 90 days to present its plan to compensate those affectedThe spokesman said that the bank then plans to contact those entitled to pay.

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