PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

BofA and Regulatory Agencies Feud over Prepaid Cards for Benefits

By Sarah Grotta
February 23, 2022
in Analysts Coverage, Prepaid, Prepaid Law
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
BofA and Regulatory Agencies Feud over Prepaid Cards for Benefits

BofA and Regulatory Agencies Feud over Prepaid Cards for Benefits

During the height of the pandemic, unemployment and other benefit payments ballooned, and payments made to a prepaid card for benefits increased accordingly. Nearly every state in the U.S. reported rampant fraud as crime rings took advantage of weak systems to create fake claims and to steal funds from those who legitimately should have received benefits.

Bank of America, which has run the prepaid card program for the State of California for over a decade, is being scrutinized by The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for they way they handled payments for false claims and inquiries of fraudulent transactions. According to the American Banker, the bank’s compliance with Regulation E is under review. They are also being criticized for not using prepaid cards with EMV chip technology, despite the State of California’s refusal to pay for the more secure technology. It makes a bank think twice about supporting these types of programs. 

Here are some key excerpts from the article:

Federal regulators are investigating Bank of America for its role in administering government benefits under a California program that was plagued by fraud at the height of the COVID-19 pandemic.

Both the OCC and CFPB investigations are in their later stages, according to sources familiar with the inquiries. The OCC has indicated that an enforcement action is possible, the sources told American Banker.

The federal inquiries BofA is facing in California are an extreme example of how government contracts can create regulatory headaches for banks. The few banks that have such contracts generally have failed to properly price in the compliance and operational risks of potentially having to respond to tens of thousands of people, experts said.

Many California beneficiaries seeking to resolve discrepancies complained they got a runaround when they contacted customer service. Some said they couldn’t access their money, even after waiting on hold for hours. Many said they couldn’t get any response from either BofA or the Employment Development Department. Others said that when they got through to BofA, they were told to speak to the EDD, or that the department referred them to the bank.

Regulators are looking into whether BofA responded promptly, as required by statute, to consumers who alleged errors or fraud on their accounts, according to sources familiar with the matter.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: Bank of AmericaCFPBCovid-19EMVEMV CardsFraudPrepaidPrepaid cardsPrepaid Law

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025
    agentic commerce

    The Agentic Advent: How the Next Iteration of AI is Shaping Commerce

    June 6, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result