U.S. Bank is being pressured by two U.S. authorities companies to cough up a complete of $35.7 million for maintaining hundreds of shoppers utilizing its ReliaCard pay as you go debit playing cards from accessing unemployment advantages in the course of the top of the Covid pandemic.
After an investigation into the financial institution’s conduct, the Consumer Financial Protection Bureau discovered that the financial institution froze tens of hundreds of accounts and didn’t present shoppers with a “reliable and quick way” to revive entry, in response to a Dec. 19 press launch from the CFPB.
Related: Internet suppliers are combating to maintain shoppers in the dead of night about their pricing
Consumers’ accounts have been frozen for no less than just a few weeks or extra from August 2020 via March 2021, and to be able to unfreeze their accounts, they needed to confirm their identities, however weren’t given an ”enough” manner to take action. Consumers additionally flagged that the financial institution didn’t give them provisional account credit after they reported “unauthorized transfers” from their accounts.
Consumer Financial Protection Act violation famous
The CFPB concluded that U.S. Bank violated each the Consumer Financial Protection Act and the Electronic Fund Transfer Act for freezing accounts and never offering provisional account credit.
“At a time when unemployment was close to 15%, many out-of-work Americans throughout the country had little choice but to rely on U.S. Bank for their unemployment benefits,” mentioned CFPB Director Rohit Chopra within the press launch. “U.S. Bank blocked entry to accounts and demanded burdensome paperwork to ensure that shoppers to regain entry to their frozen advantages.”
During the height of the Covid pandemic in April, the unemployment rate reached 14.7%, which was a level that has not been seen since the 1930s. Between March and April 2020, the country lost 22 million jobs. The industries that suffered the most job loss due to the pandemic were those that provided in-person services such as the leisure and hospitality industries.
After former President Donald Trump signed the CARES Act in March 2020, which provided pandemic unemployment programs, the federal government provided a total of $650 billion in benefits for those programs between March 2020 and September 2021.
As a result of the CFPB’s findings during its investigation, the bank is forced by the bureau to pay $5.7 million to consumers who were negatively affected by the its actions. U.S. Bank is also being hit with a $15 million penalty which will go to the CFPB’s victims relief fund.
Adjustments to how the bank provides consumers with access to unemployment funds and how it issues provisional account credits will also be made to make the processes easier for consumers.
OCC hits bank with $15 million fine
In addition, the Office of the Comptroller of the Currency, which coordinated with the CFPB during its investigation into the bank’s alleged illegal conduct, is also fining the bank $15 million for what it called “unfair practices.”
In an emailed statement to TheStreet responding to the recent fines, U.S. Bank said that only a “small portion” of ReliaCard prepaid debit card holders were affected by the account freezes and also claims that it saved taxpayers money.
“While a small portion of cardholders have been affected resulting from prolonged holds, we prevented fraud of over $375 million and returned to the states tons of of thousands and thousands in further funds despatched to questionable accounts. This saved taxpayers from important losses throughout difficult occasions,” mentioned U.S. Bank within the assertion.
Is discovering your subsequent commerce taking perpetually? Let our Hedge fund managers assist you. Get direct entry right now with a Real Money Pro membership.