U.S. Bancorp has agreed to pay $36 million to settle allegations from regulators, claiming that the bank interfered with out-of-work Americans’ ability to access benefits from unemployment assistance programs during the COVID-19 pandemic peak. The Consumer Financial Protection Bureau (CFPB) stated that due to fraud concerns, the bank froze tens of thousands of benefit accounts contracted to distribute government unemployment funds in 2020. However, the bank did not establish a clear identity verification process for individuals with frozen accounts to access their prepaid assistance cards.

U.S. Bank, the company’s banking subsidiary, will pay an estimated $21 million to settle the CFPB allegations; $5.7 million will be distributed to the affected customers while $15 million will be paid as a penalty. In a separate case, the bank will pay a $15 million fine for breaching the Office of the Comptroller of the Currency’s regulations. U.S. Bank did not admit or deny the allegations in either settlement.

According to the CFPB, U.S. Bank was contracted by over a dozen states to distribute unemployment benefits through the firm’s ReliaCard prepaid cards. U.S. Bank stated that its actions had prevented more than $375 million in fraud and reaffirmed its commitment to serving its state agency clients and their customers.