U.S. Bank slapped with $36 million in separate fines alleging ‘illegal conduct,’ unfairness related to unemployment benefits access

Fines totaling $36 million were announced Tuesday against the fifth largest bank firm in the nation for “illegal conduct” during the coronavirus crisis related to access and payment of unemployment benefits, two regulators said.

In separate actions, the Consumer Financial Protection Bureau (CFPB) ordered U.S. Bank of Minneapolis to pay nearly $21 million for purportedly keeping out-of-work consumers from accessing unemployment benefits at the height of the COVID-19 pandemic. The Office of the Comptroller of the Currency (OCC), at the same time, fined U.S. Bank, N.A. of Cincinnati $15 million for alleged unlawful administration of a prepaid card program to distribute public unemployment insurance benefit payments.

Although the two agencies separately announced the actions, they did note that they coordinated during their investigations into the bank’s alleged illegal conduct.

The bureau’s action alleges that the bank, during the COVID-19 pandemic, “froze tens of thousands of accounts.” However, the agency claims, the bank failed to provide people a reliable and quick way to regain access, CFPB said, and failed to provide provisional account credits while investigating potentially unauthorized transfers.

CFPB requires the bank to pay $5.7 million to consumers harmed by its actions and a $15 million penalty.

The OCC action alleges that the bank engaged in unfair practices (in violation of the Federal Trade Commission Act (FTCA) from August 2020 through “at least March 2021.” The agency claims that the bank had “deficient processes” for permitting consumers to regain access to their unemployment benefits in a reasonable timeframe following account freezes. In the order, the OCC states that that delays in providing access to accounts typically took weeks and sometimes even months.

“The deficiencies included instances where the Bank failed to timely notify consumers of the freezes to their accounts; the Bank’s call center representatives provided consumers with unclear, inconsistent, or inaccurate guidance on the unfreeze process; and the Bank’s process to unfreeze accounts resulted in errors and long delays,” the order states.

The order does note, however, that the bank allegedly took steps to enhance its unfreeze process beginning in September 2020, and “has subsequently undertaken corrective actions and has committed to remediate harmed consumers.”

CFPB Orders U.S. Bank to Pay $21 Million for Illegal Conduct During COVID-19 Pandemic

OCC Assesses $15 Million Penalty Against U.S. Bank for Unfair Practices