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Billion-Dollar Bank Paying $700,000 Penalty for Illegally Freezing Accounts, Transferring Customers’ Cash to Debt Collectors
Published
2 weeks agoon
By
adminNew York’s Attorney General is penalizing a national bank for freezing its customers’ accounts and handing the funds over to debt collectors.
New York AG Letitia James says an investigation by the Office of the Attorney General (OAG) found that South Dakota-based Pathward Bank illegally sent debt collectors tens of thousands of dollars from New Yorkers’ accounts and froze hundreds of clients’ accounts more than 1,400 times.
According to the AG, Pathward illegally froze accounts belonging to New Yorkers in violation of the state’s Exempt Income Protection Act (EIPA), which bans banks from freezing accounts that include certain government benefits like Social Security benefits, veterans’ benefits, disability insurance, and unemployment insurance, worth up to $3,425.
Says the Attorney General,
“Vulnerable New Yorkers had money taken out of their bank accounts by the very institution they trusted to protect them… Pathward’s illegal actions deprived New Yorkers of their hard-earned wages and critical government benefits.
My office is refunding New Yorkers for every dollar they lost due to Pathward’s illegal actions. If any New Yorker suspects that money is being improperly removed from their bank account, I encourage them to contact my office immediately.”
The OAG’s investigation also determined that the bank repeatedly violated the EIPA after instructing its third-party servicers to freeze accounts and transfer their funds to debt collectors.
Attorney General James notes that many of the accounts frozen had balances under $800, which is several thousand below the wage threshold under the EIPA.
Pathward has agreed to pay $79,664 plus interest to around 88 New Yorkers effected by the violations, and also pay a penalty of $627,000.
James says Pathward cooperated with the investigation and “voluntarily began to remediate these illegal practices last year.”
Pathward Financial had $6.868 billion in assets as of March 2023.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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US Bank Pays $35,700,000 Fine for Freezing Tens of Thousands of Accounts at Height of Pandemic, Blocking Unemployment Benefits Without Proper Recourse: CFPB
Published
5 months agoon
December 23, 2023By
adminThe Consumer Financial Protection Bureau (CFPB) says U.S. Bank will pay $35.7 million in fines for freezing tens of thousands of prepaid debit card accounts and making it difficult for people to regain access at the height of the pandemic.
The agency says the bank blocked out-of-work Americans from accessing unemployment benefits on their ReliaCard prepaid debit cards, failing to provide a simple way for accounts suspected of fraud to regain access.
“U.S. Bank froze tens of thousands of accounts. However, it failed to provide people a reliable and quick way to regain access.
The bank also failed to provide provisional account credits, while investigating potentially unauthorized transfers.”
The bank will pay $5.7 million directly to people who were harmed by its actions, as well as a $15 million penalty to the CFPB and a $15 million penalty to the Office of the Comptroller of the Currency (OCC).
“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. U.S. Bank must comply with the law, and the CFPB and OCC are making the bank pay for its conduct.”
The bank has not issued a press release in response to the fines.
U.S. Bank is a wholly-owned subsidiary of U.S. Bancorp, based in Minneapolis.
The bank is the fifth-largest commercial bank in the country, with 2,000 branches in 26 states and $668 billion in assets.
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