On December 19, 2023, the CFPB ordered the U.S. Bank to pay nearly $21 million for keeping out-of-work consumers from accessing unemployment benefits at the height of the COVID-19 pandemic. The CFPB found that the U.S. Bank failed to provide people a reliable and quick way to regain access after freezing thousands of accounts during the pandemic.
U.S. Bank is the fifth-largest commercial bank in the U.S. with 2,000 branches in 26 states. 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. Millions of newly out-of-work consumers relied on the unemployment benefits delivered through U.S. Bank’s ReliaCard prepaid card. However, tens of thousands of those consumers found their accounts frozen for weeks or more at a time. 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 U.S. Bank failed to provide them 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. Specifically, the bank harmed consumers by withholding:
Access to state benefits. U.S. Bank's anti-fraud controls froze many accounts, causing inconvenience as instructions to unfreeze them were inconsistent and unclear, leaving consumers unable to access unemployment funds.
Provisional account credits. U.S. Bank failed to promptly provide account credits for thousands of unauthorized transfers, leaving customers unable to use reported funds due to unnecessary written confirmation requirements.
The CFPB’s ordered U.S. Bank to:
Pay $5.7 million to consumers;
Provide consumers access to their unemployment funds;
Issue provisional account credits; and
Pay a $15 million fine to the CFPB’s victims relief fund.
The OCC separately fined U.S. Bank $15 million.
Read the CFPB’s news release here.
The consent order can be found here.