In a significant legal development, U.S. Bank, one of the largest banks in America, has been fined $21 million for engaging in illegal activities during the COVID-19 pandemic. This penalty was imposed by the Consumer Financial Protection Bureau (CFPB) as a consequence of the bank’s actions, which included freezing customer accounts and hindering access to crucial unemployment benefits.
Overview of U.S. Bank’s Unlawful Actions
During a period when unemployment soared to nearly 15%, many Americans depended on unemployment benefits to survive. U.S. Bank, however, blocked access to these funds for tens of thousands of customers by freezing their accounts. To regain access, customers were required to submit burdensome paperwork, a demand that added to their financial distress.
Breakdown of the $21 Million Penalty
The fine comprises two components:
- Restitution to Affected Customers: Nearly $6 million of the total fine is allocated for payments to customers who were impacted by the frozen accounts.
- Monetary Fine: The remaining $15 million is a direct fine imposed on the bank.
Legal Violations and CFPB’s Findings
The CFPB’s investigation revealed that U.S. Bank’s actions violated both the Consumer Financial Protection Act and the Electronic Funds Transfer Act. The bank unlawfully withheld state benefits by demanding additional documentation from customers receiving these benefits. In many instances, these pending payments were the sole source of income for the affected consumers. Moreover, the bank failed to provide provisional credits to consumers, leading to accounts being frozen or funds being restricted for more than 10 days, which is against federal law.