U.S. Bank to pay $36 million for illegal pandemic conduct
WASHINGTON (Reuters) -U.S. Bank will pay $36 million over allegations the company illegally blocked out-of-work consumers from accessing unemployment benefits during the coronavirus pandemic, top federal banking regulators announced on Tuesday.
The nation's fifth-largest lender froze tens of thousands of prepaid card accounts without leaving users a way to regain access, according to the U.S. Office of the Comptroller of the Currency and U.S. Consumer Financial Protection Bureau.
«U.S. Bank blocked access to accounts and demanded burdensome paperwork in order for consumers to regain access to their frozen benefits,» CFPB Director Rohit Chopra said in a statement, noting that at the time the unemployment was close to 15%.
In a statement, a U.S. Bank spokesperson said the bank had faced challenges in «unprecedented times» due to a 40-fold increase in state unemployment benefits requiring distribution that presented a heightened risk of fraud.
«While a small portion of cardholders were affected due to extended holds, we prevented fraud of over $375 million and returned to the states hundreds of millions in additional funds sent to questionable accounts,» the statement said.
Under a CFPB order, U.S. Bank is to pay nearly $21 million, comprising a $15 million penalty and $5.7 million in redress to consumers.
The OCC separately said it had assessed a $15 million penalty against U.S. Bank, which had promised to offer remedies to harmed consumers.
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