Bank of America Fined $225 Million for Deceptive Practices in Card Program

Bank of America was fined $225 million for unfair and deceptive practices related to a pre-paid card program to distribute unemployment insurance and other public benefits.

The office of the comptroller of the currency ordered the bank to pay $125 million to consumers that were harmed by the practices Twelve states were served by the card program.

The company was fined $100 million by the Consumer Financial Protection Bureau for botching the disbursement of state unemployment benefits at the height of the swine flu epidemic. Consumers would be required to be reimbursed according to the order.

The Consumer Financial Protection Bureau said that Bank of America froze people's accounts and gave them little recourse when there was no fraud.

William Halldin, a spokesman for BofA, said in an email that states were responsible for approving applications and directing the company to issue the funds. The government was able to issue more than $250 billion in unemployment benefits to more than 14 million people thanks to the efforts.

Bank of America has lost 32% of its value this year.

Internal Controls

There are other deficiencies in the bank's administration of the program, according to the OCC. The deficiencies led to violations of law and harm to consumers.

The bank left vulnerable consumers without an effective way to remedy the situation by denying them access to their mandated unemployment funds during the height of the pandemic.

According to Bank of America, illegal applicants were able to get states to approve tens of billions of dollars in payments due to the unemployment program expansion. The company worked with the states to fight fraud during the Pandemic.