Bank of America fined $225 million for 'botching' US COVID-19 aid payments | Inquirer Business

Bank of America fined $225 million for ‘botching’ US COVID-19 aid payments

/ 06:44 AM July 15, 2022
The photo shows the tower of Bank of America which is fined by US agencies for "botching" US COVID-19 aid programs

An aerial view of the Bank of America Tower is seen in New York City on August 5, 2021 (Photo by Kena Betancur / AFP)

New York, United States — Two US agencies fined Bank of America (BofA) 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 BofA for “botching” the disbursement of state unemployment programs during COVID-19, the agency said.

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“Bank of America 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 BoA $125 million for “violations of law and unsafe or unsound practices” in the bank’s administration of public benefits programs.

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The agencies also required the US 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.

“The bank failed these prepaid cardholders by denying them access to their mandated unemployment funds during the height of the pandemic, and leaving these vulnerable consumers without an effective way to remedy the situation,” said OCC Acting Comptroller Michael Hsu.

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.

Government pandemic programs “created unprecedented criminal activity where illegal applicants were able to get states to approve tens of billions of dollars in payments,” a BofA spokeswoman said.

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