Feds Fine Bank For ‘Botched’ NJ Unemployment Payments In Pandemic

NEW JERSEY — Bank of America was recently fined $225 million by two separate federal agencies for fouling up state unemployment benefits at the height of the coronavirus pandemic, including in New Jersey.

The Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) both announced their actions against the banking giant earlier this month. The CFPB fined the bank $100 million; the OCC fined it $125 million.

According to the OCC, Bank of America administered a prepaid card program that distributed unemployment insurance and other public benefit payments in 12 states, including New Jersey.

During the pandemic, Bank of America “automatically and unlawfully” froze people’s accounts with a faulty fraud detection program, and then gave them “little recourse” when it was discovered that there wasn’t any fraud, according to the CFPB.

“Taxpayers relied on banks to distribute needed funds to families and small businesses to rescue the economy from collapse when the pandemic hit,” CFPB Director Rohit Chopra said.

“Bank of America failed to live up to its legal obligations,” Chopra alleged. “And when it got overwhelmed, instead of stepping up, it stepped back.”

Under the CFPB order, in addition to the $100 million fine, Bank of America must “pay back the money that they wrongly denied to consumers across the country because of the faulty fraud filter.”

The bank must also provide each affected consumer with a lump sum consequential harm payment, to be determined through a “methodology of financial harm consumers suffered due to the time their accounts remained frozen or blocked.” In addition, affected consumers will have the opportunity to receive additional redress through an individualized review process, officials said.

It isn’t the first time that the CFPB announced sanctions against Bank of America. In 2014, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices. And in May of this year, the CFPB ordered Bank of America to pay a $10 million civil penalty over unlawful garnishments.

According to federal authorities, Bank of America is headquartered in Charlotte, North Carolina. It has approximately 4,100 branches. It has been designated as a global systemically important bank by the Financial Stability Board, and as of Dec. 31, 2021, the company had $2.5 trillion in consolidated assets – which makes it the second largest bank in the United States.

Bank of America has 215 financial centers in New Jersey, according to its website.

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