The Consumer Financial Protection Bureau (CFPB) has ordered U.S. Bank to pay $21 million for engaging in illegal conduct during the COVID-19 pandemic. This ruling comes after tens of thousands of American workers lost access to their unemployment benefits due to the bank's actions.
In a press release by the CFPB, it was revealed that U.S. Bank froze tens of thousands of customer accounts at the peak of the pandemic, thereby preventing out-of-work consumers from accessing their unemployment benefits. The bank also failed to provide provisional account credits while investigating potentially unauthorized transfers and did not establish a swift method for customers to regain access to their benefits. As part of the penalty, $5.7 million will be paid towards consumers who were adversely affected by these actions, and the bank has been ordered by the Office of the Comptroller of the Currency to pay a $15 million penalty. Additionally, U.S. Bank is required to issue provisional account credits and provide consumers with access to their unemployment funds.
U.S. Bank, one of America's leading banks with over $668 billion in assets and ranking as the fifth-largest commercial bank in the country, was found guilty of withholding access to state benefits by implementing anti-fraud controls that resulted in thousands of consumer accounts being frozen. Under the Consumer Financial Protection Act, action can be taken against companies such as U.S. Bank that violate consumer financial protection laws, including deceptive acts and practices.
"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," said CFPB Director Rohit Chopra. "U.S. Bank blocked access to accounts and demanded burdensome paperwork in order for consumers to regain access to their frozen benefits." Chopra added that "U.S. Bank must comply with the law, and both CFPB and OCC are making sure the bank pays for its conduct."
