CFPB probes U.S. Bank over joblessness payments throughout pandemic

U.S. Bancorp is the most recent bank to deal with an examination by the Consumer Financial Protection Bureau into the administration of joblessness insurance coverage payments on pre-paid debit cards throughout the pandemic.

The Minneapolis business divulged the CFPB probe in a securities filing Tuesday. It likewise stated that it is working together completely with all pending examinations. A business representative decreased Wednesday to supply more remark.

U.S. Bancorp’s filing did not particularly discuss scams, however many banks have actually been competing with the repercussions of scams in connection with broadened joblessness insurance coverage payments throughout the COVID-19 pandemic.

U.S. Bank is among the biggest gamers in business of dispersing welfare. Since the start of the pandemic, the Minneapolis bank has actually had agreements with federal government firms in more than 15 states.

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In March 2020, Congress strengthened the funds readily available to employees who lost their tasks as an outcome of the health crisis. During a six-month period in 2020, an approximated 9.9% of the cash paid in 4 states under 2 short-lived pandemic-era joblessness programs went to most likely scammers, according to a current audit by the U.S. Department of Labor’s inspector general.

In July of this year, Bank of America was fined $225 million by the CFPB and the Office of the Comptroller of the Currency in connection with issues that took place at the height of the pandemic, especially in California, where the Charlotte, North Carolina-based bank has the agreement to disperse welfare on pre-paid debit cards.

The regulators stated that BofA stopped working to react to 10s of countless cardholders who reported unapproved deals, and likewise that the bank obstructed countless genuine recipients from accessing their funds.

BofA has actually mainly taken out of the federal government advantages company, and other banks are likewise pulling back amidst modifications in the economics of business.

Late in 2015, KeyCorp chose to stop supplying pre-paid cards for unemployed advantages in Illinois — a choice that added to a 24% decrease in the business’s cost earnings from cards and payment services throughout the very first quarter.

“Banks are payment processors, and they are being asked to get involved in stopping the fraud,” Haywood “Woody” Talcove, the CEO of LexisNexis Special Services, informed American Banker previously this year. “Why would a bank continue to provide a service when they’re losing money?”

U.S. Bank, the banking subsidiary of U.S. Bancorp, is among the biggest gamers in business of dispersing welfare. Recipients gain access to their funds on a reloadable pre-paid debit card from U.S. Bank called ReliaCard.

Since the start of the pandemic, the list of states where the $601 billion-asset bank has actually held federal government agreements consists of Nebraska, Ohio, Kentucky, Michigan, Iowa, Colorado, Kansas, North Carolina, Utah, Maine, Oregon, Wyoming, Minnesota, Arkansas, Louisiana and Pennsylvania, according to a CFPB database.

In July 2020, federal district attorneys in Philadelphia stated that law-enforcement firms had actually avoided $28 million in Pennsylvania pandemic joblessness relief funds from going to scammers by either check or direct deposit. The district attorneys likewise credited U.S. Bank for utilizing used analytics to determine another $16 million in deceptive claims.

Fraud in the Keystone State has actually continued, though. Last November, Pennsylvania Treasurer Stacy Garrity alerted that fraudsters were targeting customers by erroneously informing them in text that their state-issued U.S. Bank accounts had actually been momentarily frozen, and motivating them to click a link and supply more details.

U.S. Bank settled a different matter with the CFPB in July, accepting pay a $37.5 million fine after the bureau discovered that the bank had insufficient treatments in between 2010 and 2016 for avoiding and identifying the opening of unapproved consumer accounts.


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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