(Bloomberg) -- Bank of America Corp. was ordered by a judge to change its practices after thousands of unemployed California customers receiving public benefits complained that when their prepaid debit cards were hacked, the bank made matters worse by treating them like criminals.
In response to allegations to that the bank was refusing to investigate account holder claims and in some cases freezing accounts that weren't affected by fraud, U.S. District Judge Vince Chhabria on Tuesday directed the bank to take several steps to improve its processes. The reforms were finalized in an agreement between the bank and lawyers for the customers who sued in January.
“As California's unemployment program faced billions of dollars in fraud, Bank of America's No. 1 goal always has been to ensure legitimate recipients could access their benefits,” the bank said in a statement. “With this agreement, we are committing to additional measures to help those entitled to unemployment benefits receive those benefits as quickly as possible.”
The San Francisco-based judge concluded last month that the account holders suffered “irreparable harm” after Bank of America used a faulty screening process to freeze accounts needed to “feed their families and keep a roof over their heads” through the pandemic.
“Just as companies can establish irreparable harm by showing that losing money will likely cause them to shut down, human beings can establish irreparable harm by showing that losing wages or benefits will likely cause them to be evicted, go hungry, or be denied necessary medical care,” Chhabria wrote in May.
Lawyers representing the account holders said in an emailed statement that the case will move forward with pre-trial information sharing, and that they'll seek an order requiring the bank to make permanent changes to its practices as well as monetary damages.
The case is Yick v. Bank of America, 21-cv-00376, U.S. District Court, Northern District of California (San Francisco).
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