Bank of America ‘Botched’ Unemployment Payments in NJ
It was hard enough filing for, and getting, unemployment benefits at the peak of the pandemic. Now imagine qualifying for benefits, only to have the bank freeze your account.
Federal regulators have fined Bank of America $225 million for 'botched' state unemployment benefits disbursements.
In announcing the fines, Consumer Financial Protection Bureau director Rohit Chopra said, "Taxpayers relied on banks to distribute needed funds to families and small businesses to rescue the economy from collapse when the pandemic hit. Bank of America failed to live up to its legal obligations."
BoA provided debit cards to many benefits recipients. To assure benefits were going where they were intended, they also installed automatic fraud filters.
However, the filters were fraught with glitches that often froze accounts when there was no real fraud.
The CFPB says Bank of America automatically and unlawfully froze people's accounts with a faulty fraud detection program.
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. - Consumer Financial Protection Bureau
Regulators say unfreezing the accounts proved difficult, with BoA not providing enough staff to deal with the problem.
Chopra says, "When it (Bank of America) got overwhelmed, instead of stepping up, it stepped back."
It is not known how many New Jersey residents were effected, but those that were could be entitled to damages. Bank of America is no longer used by the state to deliver benefits.
The CFPB has ordered BoA "to provide each affected consumer with a lump sum consequential harm payment" and gives "consumers the opportunity to receive additional redress through an individualized review process."