BofA fined $225 mn for ‘botching’ COVID aid payments
Two U.S. agencies fined Bank of America a total of $225 million on charges it wrongfully froze unemployment and other public benefit programs at the height of the COVID-19 pandemic.
The Consumer Financial Protection Bureau imposed a $100 million penalty on Bank of America (BofA) for “botching” the disbursement of state unemployment programs during COVID-19, the agency said.
“BofA automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud,” the agency said in a news release.
The Office of the Comptroller of the Currency fined BofA $125 million for “violations of law and unsafe or unsound practices” in the bank’s administration of public benefits programs.
The agencies also required the bank to provide payments to those wrongfully deprived payments.
The consumer agency said BofA during the pandemic altered its practices for investigating debt card fraud, replacing a “reasonable” investigation with a fraud filter system that automatically triggered an account freeze.
The bank further “made it very difficult” for people to unfreeze the accounts, the agency said.
Bank of America defended its role during the pandemic, saying it facilitated payments of more than $250 billion in pandemic funds to more than 14 million people.