Banking

Some Banks Seize Stimulus Money To Cover Customer Overdrafts

Some cash-strapped people are losing some or all of their coronavirus stimulus money because their bank accounts are overdrawn.

“For weeks, we have pressed the Treasury Department to exercise its authority and ensure that Americans receive the full amount of their stimulus payments,” senators Elizabeth Warren (D-Massachusetts) and Sherrod Brown (D-Ohio) wrote in a letter to the American Bankers Association on Thursday (April 16). “While Treasury has refused to follow congressional intent, that does not give banks license to steal the stimulus payments from their customers.”

USAA — a financial services company that serves people in the military and their families — originally kept $2,400 from a Minneapolis woman, her disabled veteran husband and their newborn baby, according to a report in the New York Times. 

Once the situations were brought to USAA’s attention, the bank decided to reverse the withdrawal and said it would discontinue the practice. The country’s four biggest banks — Bank of America, JPMorgan Chase, Citibank and Wells Fargo — pledged not to garnish customers’ stimulus funds.

“This was brought to our attention and the team worked quickly to figure out a solution on how we can help members during this unprecedented time,” Matthew Hartwig, USAA’s director of communications, told Newsweek

He added that USAA was aware of the “unthinkable challenges” everyone is facing during the pandemic and they want to help.

“Our goal is to provide much-needed and immediate support to American families during these unprecedented times,” David Chubak, Citi’s head of US retail banking, said in a statement.

An audio recording of Treasury official Ronda Kent said that “there’s nothing in the law that precludes that action” and that it was up to the discretion of the banks, the American Prospect reported. 

The Internal Revenue Service (IRS) said on Saturday (April 11) that the first stimulus checks were released via direct deposit and more money will be coming soon.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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