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U.S. Bank Penalized by CFPB and OCC for Illegal Conduct During Pandemic

S.J. Steinhardt
Published Date:
Dec 28, 2023

U.S. Bank has been fined a total of $56.7 million for illegal conduct during the Covid-19 pandemic, such as preventing out-of-work consumers from accessing their unemployment benefits.

The bank froze tens of thousands of accounts and made it hard for customers to regain access. The bank also failed to provide provisional account credits to some customers who reported unauthorized transfers, the Consumer Financial Protection Bureau (CFPB) said as it ordered the bank to pay $21 million for its actions, in addition to paying $5.7 million to consumers harmed by its actions and a $15 million penalty.

The Office of the Comptroller of the Currency (OCC) separately fined U.S. Bank $15 million. The CFPB and OCC coordinated during their investigations into U.S. Bank’s illegal conduct.

“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. U.S. Bank blocked access to accounts and demanded burdensome paperwork in order for consumers to regain access to their frozen benefits," said CFPB Director Rohit Chopra. “U.S. Bank must comply with the law, and the CFPB and OCC are making the bank pay for its conduct.”

At the onset of the COVID-19 pandemic in 2020, U.S. Bank had contracts with at least 19 states and the District of Columbia to deliver unemployment benefits. While millions of newly out-of-work consumers relied on the unemployment benefits delivered through U.S. Bank’s ReliaCard prepaid card, tens of thousands of those consumers found their accounts frozen for weeks or more at a time. To unfreeze their accounts, consumers had to verify their identities to unfreeze their accounts, but the bank lacked an adequate way for them to do so. Many other consumers found that the bank failed to provide them with provisional account credits after they reported unauthorized transfers from their accounts.

The CFPB found that U.S. Bank violated the Consumer Financial Protection Act and the Electronic Fund Transfer Act, harming consumers by withholding access to state benefits and provisional account credits.

In addition to its order requiring U.S. Bank to pay $5.7 million to consumers harmed by its actions and the $15 million penalty to the CFPB’s victims relief fund, the bank must also provide consumers access to their unemployment funds and issue provisional account credits.