U.S. Bank National Association
On December 19, 2023, the Bureau issued an order against U.S. Bank in connection with its administration of prepaid debit cards that held unemployment insurance benefits. U.S. Bank has offered prepaid debit cards to eligible consumers in at least 19 states and the District of Columbia to distribute unemployment insurance benefits through its ReliaCard program. In the summer of 2020, U.S. Bank implemented new freeze criteria to determine whether to freeze a card due to suspected fraud. Using these new fraud controls and its expanded criteria used for freezing accounts, U.S. Bank froze the accounts of tens of thousands of cardholders eligible for benefits. The Bureau found that U.S. Bank engaged in unfair acts or practices in violation of the Consumer Financial Protection Act of 2010 by failing to provide those eligible ReliaCard prepaid debit cardholders whose accounts U.S. Bank froze with adequate means to verify their identities and timely regain access to their benefits. For freezes that U.S. Bank imposed in August 2020 through November 2020, on average it took a month or longer for consumers to unfreeze their ReliaCard accounts. And for freezes that U.S. Bank imposed in December 2020 through March 2021, on average it took multiple weeks for consumers to unfreeze their ReliaCard accounts. The Bureau also found that U.S. Bank violated the Electronic Fund Transfer Act, and its implementing Regulation E, by failing to timely investigate ReliaCard prepaid debit cardholders’ notices of error concerning alleged unauthorized electronic fund transfers (EFTs). The order requires U.S. Bank to provide $5.7 million in redress to consumers and to pay a $15 million civil money penalty. The order also requires U.S. Bank to take measures to ensure future compliance. The OCC concurrently issued an order against U.S. Bank addressing U.S. Bank’s conduct relating to administration of the ReliaCard program, separately fining it $15 million.
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