Last week, Zaid Jilani laid out the tale of a man who lost his job and car — and spent three days in jail — after Chase bank cut him a check, but then refused to cash it and had him arrested on suspicion of fraud. This was just the latest in a string of tales about banks behaving badly and mistreating customers (even stealing their pets).
The LA Times’ David Lazarus today profiled a case in which Bank of America not only harmed a customers finances by diverting $30,000 of his Social Security payments into the wrong account, but had taxpayers foot the bill for its error:
Bank of America gave the same 10-digit account number to two customers, resulting in about $30,000 in a Riverside man’s Social Security payments going astray. But even after the man’s relatives pinpointed the problem and brought it to the bank’s attention, the family said BofA did little to fix things until the San Bernardino County district attorney’s office launched its own investigation. Moreover, the Social Security Administration, not the bank, ended up refunding the missing money.
To be sure, the person who was collecting these incorrect payments and spending them — instead of reporting them to the proper authorities — should take her fair share of the blame, and will have to pay back the Social Security administration. Still, the fact that BofA was alerted to the problem but couldn’t be bothered to do something about it until threatened with legal action is extremely problematic. As Lazarus put it, “BofA’s actions, or non-actions, are deeply troubling, to say the least.”
BofA, since the housing bubble burst, has been one of the banks least capable of helping homeowners who are in dire financial straits through no fault of their own. It was at the forefront of the foreclosure fraud scandal, employing robo-signers who were approving foreclosure despite having “no idea” what they were signing. Andrew Jakabovics and I also caught bank flagrantly violating its contract with Treasury while participating in the Home Affordable Modification Program.
Finally, the bank paid nothing in federal taxes last year, instead collecting nearly $1 billion in tax benefits. Sending Social Security benefits to the wrong person, and then not fixing the error, is just one more instance in which the bank is failing to take responsibility for its actions.