Bank of America was recently slapped on the wrist with fines totaling $225 million!
What did they do, you ask? No, they didn’t open multiple fake accounts to meet sales goals like those notorious outlaws over at Wells Fargo. Instead, they really screwed up delivering unemployment benefits during the height of the pandemic – a time when vulnerable consumers out of work and stuck at home needed money to pay for food and basic necessities.
But don’t take our word for it. Just ask the Comptroller of Currency, Michael J. Hsu: “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. Banks must pay attention to the financial health of their customers and conduct their activities in accordance with all consumer protection laws.”
Let’s be honest – quarantines were rough for everybody. The first few weeks of Netflix were great, but then in many ways, it began to feel like a prison sentence. Hey, at least if you lost your job, you could collect unemployment and shop for groceries…oh wait. No. Card declined.
This is what Bank of America is ultimately being accused of: royally screwing up the disbursement of money that people needed to survive.
But more specifically, Bank of America has been accused of the following:
Replacing reasonable fraud investigation procedures with a simplified fraud filter.
A system of red flags was created to lock accounts suspected of fraud instead of undergoing proper review, resulting in many innocent parties getting totally locked out of their funds. But wait, it gets better. The bank also retroactively applied its simplified fraud filter to purchases that had already gone through.
Providing poor customer service.
This one does sound rather boo-hoo until you remember that people are calling to unlock their funds for food and other necessities. Imagine being told that agents are available 24/7 to answer your questions…and then having to wait on hold for hours every day for days on end until you finally reach a person.
Passing the buck.
One issue led to another, creating additional offenses. Overwhelmed with consumers trying to access their money, Bank of America referred many of these distressed parties back to the state agency for verification. However, the state agencies were also overwhelmed, especially in California. The Consumer Protection Financial Bureau (CFPB) described this situation as “essentially redirecting people into a black hole.” Good enough for government work, as they say.
Unfair, deceptive, or abusive acts and practices committed by financial institutions are subject to punishment.
Bank of America will need to return all that money it denied to consumers because of its faulty fraud filters, along with issuing lump sum payments for consequential financial harm. In addition to all that cash, they will need to pay a $100 million fine to the CFPB and a separate $125 fine from the OCC (Office of the Comptroller of Currency) which will go back to the U.S. Treasury, where it will be put into the piggy bank that is only broken open for big bank bailouts (here we jest, but it seems plausible enough).
So, there you have it. No, Bank of America did not steal money, but they withheld it at a time when consumers were in dire need. Horror stories include people living out of their cars for weeks on end and mothers who had to leave behind full carts in the grocery store. If you had a Bank of America issued unemployment benefits card, maybe you have your own set of horror stories. If you do, you should definitely submit a complaint to the CFPB. Although they have lots of money (and the government will always print them more if they run out), banks do not like getting fined, so they will usually respond to complaints within 15 days.
Over $250 billion were distributed to 14 million people in 12 different states through Bank of America’s debit card program during the pandemic. Unfortunately, a lot of money was not disbursed (amount still to be determined) to a number of people because the bank had its fraud system on autopilot and did not hire enough people to deal with the influx of complaints.
In another related issue, there were some states where consumers were subjected to actual fraud, because the bank issued non-chip debit cards (which are easier for committing fraud), especially in California and Nevada. The reason these cards were issued instead of more secure chip cards is that they cost less money to distribute.
Yikes. Hopefully, they learned their lesson for the next pandemic. And of course, hopefully, there won’t be another pandemic. Take note, however, that there does not need to be a pandemic occurring in order for you to access government benefits. If you ever lose a job or have your hours or salary cut back, you may qualify for certain unemployment or underemployment benefits in your state.