U.S. Bank, the nation\u2019s fifth-largest bank, has been fined nearly $36 million by federal regulators for violating consumer protection laws.<\/p>\n\n\n\n
The bank froze access to hundreds of thousands of prepaid debit cards used to distribute unemployment insurance benefits during the Covid-19 pandemic.<\/p>\n\n\n\n
U.S. Bank was fined an additional $15 million by the Office of the Comptroller of the Currency.<\/p>\n\n\n\n
WASHINGTON \u2014 The Consumer Financial Protection Bureau<\/u><\/a> on Tuesday announced it has fined U.S. Bank<\/u><\/a> nearly $21 million for cutting off access to unemployment insurance benefits<\/u><\/a> during the height of the Covid-19 pandemic. The Office of the Comptroller of the Currency imposed an additional $15 million penalty<\/u><\/a> on the bank over the same practices.<\/p>\n\n\n\n \u201cU.S. Bank blocked access to accounts and demanded burdensome paperwork in order for consumers to regain access to their frozen benefits,\u201d CFPB Director Rohit Chopra<\/u><\/a> said in a statement.<\/p>\n\n\n\n The fifth-largest commercial bank in the country, U.S. Bank administered prepaid debit cards to distribute unemployment insurance benefits through its ReliaCard program.<\/p>\n\n\n\n But starting in the summer of 2020, when unemployment rose close to 15%<\/u><\/a>, the bank froze tens of thousands of accounts due to suspected fraud. It then failed to provide a reliable method for consumers with frozen cards to regain access to their benefit money, the CFPB said.<\/p>\n\n\n\n As part of the settlement, the bank did not admit or deny wrongdoing.<\/p>\n\n\n\n Between March 2020 and July 2021, states issued $794 billion in combined state and federal unemployment benefits<\/u><\/a>.<\/p>\n\n\n\n The demand for the prepaid cards \u201cgrew nearly 4000%,\u201d during the pandemic, Cheryl Leamon, a representative for U.S. Bank, told CNBC.<\/p>\n\n\n\n \u201cWhile a small portion of cardholders were affected due to extended holds, we prevented fraud of over $375 million and returned to the states hundreds of millions in additional funds sent to questionable accounts,\u201d Leamon said. The bank has since made enhancements to the ReliaCard program, Leamon added.<\/p>\n\n\n\n