The Consumer Financial Protection Bureau (CFPB) has fined Bank of America $100 million for botching the disbursement of state unemployment benefits at the height of the pandemic, according to a CFPB press release. Bank of America automatically and unlawfully froze people’s accounts with a faulty fraud detection program. These consumers were then given little recourse despite the fact that there was, in fact, no fraud. This order requires Bank of America to undertake a process that is estimated to result in hundreds of millions of dollars in redress to consumers. A separate order from the Office of the Comptroller of the Currency (OCC) is also fining the bank $125 million. Bank of America has contracts with various state agencies to deliver unemployment and other benefit payments to California consumers electronically through prepaid debit cards and accounts. Under the Electronic Fund Transfer Act, consumers are protected when they use electronic methods to transfer money; this includes prepaid cards. Protections include that after a consumer contacts the financial institution that there has been an error, the financial institution must conduct a prompt, reasonable, and timely investigation.
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