Bank of America faces $225 M fine over mishandling unemployment benefits

Bank of America faces $225 M fine over mishandling unemployment benefits

Bank of America has been fined $225 million by two federal regulators for mishandling prepaid debit card accounts used by a dozen states to distribute unemployment benefits during the pandemic. The bank has to compensate people for damages and federal officials say the amount could likely go up to hundreds of millions more. 

According to the Consumer Financial Protection Bureau, due to a faulty fraud detection program, Bank of America froze accounts. It stymied customers who sought to have them unlocked, cutting people off from desperately needed funds in 2020 and 2021. Rohit Chopra, director of the consumer bureau says, "Taxpayers relied on banks to distribute needed funds to families and small businesses to rescue the economy from collapse when the pandemic hit." Bank of America failed to live up to its legal obligations. And when it got overwhelmed, instead of stepping up, it stepped back."

Meanwhile, Bank of America said that the problems stemmed from state systems besieged with fraudulent claims. Bill Halldin, a spokesman for the bank said that the pandemic “created unprecedented criminal activity where illegal applicants were able to get states to approve tens of billions of dollars in payments." 

Source: The New York Times
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