CFPB: US Bank Illegally Blocked Workers From Unemployment Benefits
BY PYMNTS | DECEMBER 19, 2023
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US Bank
America’s consumer watchdog said U.S. Bank wrongly kept workers from unemployment benefits during the pandemic.
As such, the Consumer Financial Protection Bureau ordered the bank to pay nearly $21 million, the agency said in a Tuesday (Dec. 19) press release. The CFPB said the order stems from the height of the pandemic when “U.S. Bank froze tens of thousands of accounts.”
“However, it failed to provide people a reliable and quick way to regain access,” the release said. “The bank also failed to provide provisional account credits, while investigating potentially unauthorized transfers. Today’s order requires U.S. Bank to pay $5.7 million to consumers harmed by its actions and to pay a $15 million penalty.”
In a statement issued to PYMNTS, U.S. Bank said the pandemic saw its ReliaCard prepaid debit card program — used to disburse state unemployment benefits — grow by nearly 4,000%.
“In the face of these unprecedented times, the bank stepped up to enable the government to provide assistance to those in need during the pandemic and worked to identify and combat fraud,” the statement said. “While 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.”
The CFPB’s order comes as consumers are seeking faster disbursements from government agencies and corporations.
According to PYMNTS Intelligence, consumers in the last two years have received 36% of payouts via instant payment rails. However, payors can boost their instant payment use, as nearly three-quarters of consumers prefer this method, and 62% would have picked instant options if given the chance.
“Consumers are also willing to put their money where their mouth is,” PYMNTS wrote last month. “Many are willing to pay a fee to receive payouts via instant rails, especially those receiving payments for freelance, contract or consulting projects.”
This is not the first time U.S. Bank has come under fire by the CFPB. Last year, the regulator issued a $37.5 million consent order after saying the bank had illegally accessed customers’ credit reports and personal information to open accounts without their authorization.
U.S. Bank tied sales goals to employees’ job requirements and offered workers incentives for selling multiple products to customers, the CFPB said at the time.
