U.S. Bank to pay $36M in CFPB, OCC settlements

Both agencies announced fines of $15 million against U.S. Bank on Tuesday, while the CFPB ordered the bank to pay an additional $5.7 million in redress.

The details: From August 2020 through at least March 2021, U.S. Bank had “deficient processes for permitting consumers to regain access to their unemployment benefits in a reasonable timeframe following account freezes,” according to the OCC’s press release.

Tens of thousands of consumers with frozen accounts were affected for weeks or longer, the CFPB’s release alleged. The bank lacked adequate verification processes, the agency said, and did not provide consistent instructions to consumers on how to regain access.

The agency also accused the bank of failing to timely provide provisional account credits to thousands of consumers who reported unauthorized transfers from their accounts.

The CFPB found U.S. Bank violated the Consumer Financial Protection Act and the Electronic Fund Transfer Act. The OCC found the bank violated Section 5 of the Federal Trade Commission Act.

Compliance considerations: U.S. Bank must implement a compliance plan to ensure its administration of unemployment insurance benefit prepaid debit card accounts complies with all applicable laws, per the CFPB’s order.

The coordinated enforcement action by the CFPB and OCC follows the agencies combining to fine Bank of America $225 million in 2022 for similar alleged failures related to unemployment benefit disbursements the bank made during the pandemic.

Also last year, U.S. Bank was fined $37.5 million by the CFPB for its alleged opening of customer accounts and access of credit reports without permission.

Bank response: “The bank is proud of the enhancements it has made to the ReliaCard program since the inception of the pandemic,” said U.S. Bank in an emailed statement. “We remain committed to serving our state agency clients and their customers.”