U.S. Bank disclosed Tuesday the Consumer Financial Protection Bureau (CFPB) launched an investigation into the bank’s administration of unemployment benefits during the Covid-19 pandemic.
According to its quarterly report filed with the Securities and Exchange Commission, U.S. Bank said it is under investigation by the CFPB regarding “the company’s administration of unemployment insurance benefit prepaid debit cards during the pandemic timeframe.” The bank offered no other information on the investigation, and through a spokesperson, declined to comment further. In its disclosure, the bank noted it is “cooperating fully with all pending examinations, inquiries, and investigations.”
A CFPB spokesperson could not confirm or deny the existence of a pending investigation because that information is confidential.
U.S. Bank is not the first financial institution to have its procedures for distributing unemployment benefits using prepaid cards during the pandemic scrutinized by the CFPB.
In July, the CFPB and Office of the Comptroller of the Currency fined Bank of America $225 million for improperly freezing the unemployment benefits of customers using prepaid debit cards in 12 states. In that case, Bank of America installed a faulty fraud detection program, the regulators said, which froze customer accounts even when there was little or no evidence of fraud. Bank of America also made it difficult for legitimate account holders to unfreeze their accounts and receive their unemployment benefits, the regulators said.
U.S. Bank was also fined $37.5 million in July by the CFPB for opening unauthorized bank accounts for customers, as well as accessing customers’ credit reports without their permission, mostly in 2015 and 2016. The bank also agreed to a consent order in which it pledged it had implemented or would implement a number of mitigation measures, such as enhancing its processes for account openings, particularly for what constituted consumer consent, as well as for detecting and investigating sales misconduct.