WASHINGTON—Bank of America has been fined $225 million by a pair of U.S. banking regulators over what they called a “botched” handling of jobless benefits during the pandemic.
The Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) said the bank had a faulty fraud detection program that improperly froze the prepaid card accounts of thousands of people seeking jobless benefits in 2020 and 2021.
In addition to the fine, the regulators ordered the bank to pay redress to harmed consumers, which the CFPB estimated would amount to hundreds of millions of dollars more.
As jobless claims surged during the pandemic, the CFPB said the bank, which administered prepaid jobless benefit debit cards on behalf of 12 states, implemented an automatic fraud filter, which resulted in thousands of cardholders having their accounts improperly frozen….