Sonali Ray, writer
Brief news
- The CFPB has filed a complaint against Comerica Bank for mismanaging the Direct Express prepaid debit card program, alleging improper call handling and unauthorized ATM fees.
- Comerica is accused of prioritizing profits over the needs of vulnerable customers, including the elderly and disabled.
- Comerica disputes the CFPB’s claims, asserting they acted under federal oversight and will defend their practices.
Detailed news
On Friday, the Consumer Financial Protection Bureau (CFPB) lodged a complaint against Comerica Bank, alleging that the regional bank had failed to properly administer a federal benefits program that makes use of prepaid debit cards.
According to the allegations made in the lawsuit, Comerica Bank “intentionally terminated” more than 24 million customer care calls, charged more than one million cardholders ATM fees that they did not due, and mismanaged fraud reports while offering government benefits through the Direct Express prepaid debit card program.
Comerica increased its bottom line at the expense of Americans who were living on a fixed income, according to Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB). “Comerica deliberately disconnected millions of calls and harvested illegal junk fees,” Chopra stated.
Recipients of Social Security and other government programs are eligible to utilize the Direct Express program, which is a prepaid card, to pay for a variety of things, including groceries and gas. Since 2008, Comerica has been under contract with the Department of the Treasury to manage the program and provide customer care for the millions of Americans who use the prepaid card. A significant number of these individuals are disabled or elderly and do not have a bank account.
“When people had problems with their accounts, it was often impossible to talk to someone who would help,” the Consumer Financial Protection Bureau (CFPB) claims, despite the fact that the Direct Express website states that it provides customer care around the clock.
A previous complaint that Comerica had filed against the Consumer Financial Protection Bureau (CFPB) was submitted on November 8th. In the complaint, Comerica argued that the bureau had exceeded its authority in its handling of the case and that it “has failed to acknowledge that, as Financial Agent of the Direct Express program, Comerica generally acted with the oversight and knowledge or approval of the federal government.”
“Throughout the course of the Consumer Financial Protection Bureau’s investigation, we have cooperated by sharing information and data to illustrate the one-of-a-kind nature of this program and the fact that we operate under the supervision of the Fiscal Service,” said Louis Mora, vice president of public relations for Comerica. Even though we have been making sincere efforts to offer this essential context, the Consumer Financial Protection Bureau has persistently disregarded our arguments and documentation.
The next thing that Mora said was, “We will continue to vigorously defend our record as the financial agent for the Direct Express program, and we will remain committed to serving our cardholders.”
Bank of America was fined $100 million by the Consumer Financial Protection Bureau (CFPB) in 2022 for mishandling state unemployment benefits in 2020 and 2021. This was one of the many instances in which the CFPB has taken action against banks for mishandling benefits in the past. In a separate order, the Office of the Comptroller of the Currency levied a fine of one hundred twenty-five million dollars on the bank.
Source : CNBC news
