Bank of America Must Pay Users in These 12 States After Failing to Distribute Pandemic Benefits
- At the height of the pandemic, Bank of America made it impossible for more than 100,000 unemployed workers to receive their unemployment benefits.
- Bank of America has been fined $225 million for its mishandling of unemployment benefits.
Due to a Bank of America mistake, over 100,000 unemployed workers had no access to the funds they were owed.
In July, Bank of America (BOA) was fined $225 million for failing to distribute unemployment benefits during the pandemic. According to the Consumer Financial Protection Bureau (CFPB), BOA botched "the disbursement of state unemployment benefits at the height of the pandemic."
It looks like things are about to be set right for those damaged by BOA’s actions.
Why was BOA involved in unemployment benefits?
Although unemployment benefits are paid through tax dollars collected by employers, some states hired BOA to administer payments as the pandemic raged.
Unemployment benefits were paid in one of two ways: Through direct deposit into a recipient’s account or with a prepaid card. In theory, a person should have received a card with unemployment benefits preloaded. Once received, they could use the card like a debit card, making necessary purchases.
However, things did not work out like that for recipients in the following 12 states:
- New Jersey
- North Carolina
- South Carolina
A bungled mess
During the Trump administration, Congress passed a bill to boost unemployment benefits by $600 a week, and states were besieged with fraudulent claims. BOA installed a faulty fraud detection program, and that’s when the trouble began.
Legitimate debit cards were flagged as fraudulent, and according to CFPB, BOA improperly froze bank accounts and failed to assist customers who tried to have their accounts unlocked.
In 2020 and 2021, more than 100,000 unemployed people in 12 states were cut off from badly needed funds. When those people reached out to BOA, the banking giant refused to accept claims online or allow anyone to make a claim at a branch. Instead, it directed them to a call center where they were regularly on hold for hours.
BOA received a fine of $100 million by the CFPB and $125 million by the Office of the Comptroller of the Currency. The bank was also ordered to compensate those hurt by their unfair and deceptive practices.
BOA was given 90 days to submit a plan for reimbursing consumers.
These savings accounts are FDIC insured and could earn you 11x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.