The banking firm Green Dot was hit with a $44 million civil money penalty Thursday over findings of “numerous” unfair and deceptive practices as well as deficient consumer compliance risk management and Bank Secrecy Act/anti-money laundering (BSA/AML) programs, the Federal Reserve said in a consent order.
The order focuses on Green Dot Corporation, Austin, Texas, a registered bank holding company that owns and controls Green Dot Bank, Provo, Utah, (also named in the order) and “various nonbank subsidiaries.”
The Fed said Green Dot violated consumer law in its marketing, selling, and servicing of prepaid debit card products (including continuing to assess monthly fees on zero-balance accounts that the firm had said would be closed), and its offering of tax return preparation payment services. It noted, for example, that Green Dot “failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third party’s website.” It said also that Green Dot blocked access to accounts of legitimate customers receiving unemployment benefits and lacked reasonable policies and procedures to help customers cure those blocks.
The order notes that Green Dot is making enhancements to its consumer compliance risk management and BSA/AML compliance programs, “but additional substantive corrective actions are required.” Green Dot, the Fed said, must hire an independent third party to strengthen its consumer compliance risk management program and address the root causes of consumer complaints; and develop an effective BSA/AML program and hire an independent third party to conduct a review of certain transaction activities.