Bank unlawfully froze customer accounts during COVID pandemic
One of America's largest banks has been fined $21 million for illegal conduct.
The Consumer Financial Protection Bureau (CFPB) has assessed the penalty against U.S. Bank as a result of the bank's unlawful activity during the COVID-19 pandemic.
Specifically, U.S. Bank froze customer accounts, preventing tens of thousands of customers from accessing unemployment benefits.
“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."
The penalty includes nearly $6 million in payments to customers impacting by the frozen accounts and a $15 million fine.
The CFPB's investigation found that U.S. Bank violated both the Consumer Financial Protection Act and the Electronic Funds Transfer Act.
U.S. Bank unlawfully withheld state benefits by requiring additional documentation from customers receiving the benefits. In many cases, the pending payments were the only source of income for a consumer.
Additionally, the bank failed to provide provisional credits to consumers, meaning accounts were frozen or funds were restricted for more than 10 days, in violation of federal law.
