People unemployed during the pandemic will get a cash infusion in their accounts to start the new year.
U.S. Bank has to pay nearly $21 million after it prevented people from accessing unemployment benefits. Approximately $5.7 million of that amount is for consumers affected by this, the Consumer Financial Protection Bureau said in a release.
The Minneapolis-based financial institution not only had to pay the penalty to consumers, mandated by the Consumer Financial Protection Bureau, but they were also fined $15 million by the Office of the Comptroller of the Currency (OCC) for the CFPB’s victims relief fund.
During the pandemic in 2020, U.S. Bank had contracts with at least 19 states and the District of Columbia to deliver unemployment benefits.
According to the CFPB release, millions of newly unemployed workers relied on the unemployment benefits delivered through U.S. Bank’s ReliaCard prepaid card.
But tens of thousands of those consumers found their accounts frozen for weeks or longer. People had to verify their identities to unfreeze their accounts, but the bank didn’t have an adequate system for them to do so.
"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," CFPB Director Rohit Chopra said in a statement in the release. "U.S. Bank must comply with the law, and the CFPB and OCC are making the bank pay for its conduct."
Other beneficiaries learned that U.S. Bank didn’t provide them with provisional account credits after they reported unauthorized transfers from their accounts, the CFPB noted.
U.S. Bank is the fifth-largest commercial bank in the country, with 2,000 branches in 26 states.
This story was reported from Washington, D.C.