An $80 billion Texas bank has been sued for allegedly “systematically failing” 3.4 million primarily unbanked Americans receiving federal benefits, the federal consumer financial protection agency said Friday, which is seeking a stop to the bank’s conduct, redress for harmed borrowers, and the imposition of a civil money penalty (CMP).
In a release, the Consumer Financial Protection Bureau (CFPB) said the lawsuit against Comerica Bank of Dallas charges several alleged misdeeds by the bank. Those include: deliberately hanging up on 24 million customer service telephone calls, charging alleged illegal ATM fees to more than 1 million cardholders, mishandling fraud complaints while providing federal benefits through the “Direct Express” prepaid debit card program, and impeding cardholders from exercising their rights under the law.
Regarding impeding consumers from exercising their rights, the CFPB charged that that the bank imposed illegal terms of service on consumers seeking to stop payments. The bureau claimed Comerica led its consumers to agree to waive their consumer protections by requiring cardholders to contact and request merchants to stop pre-authorized payment transfers from their account in situations where the law in fact required the bank to stop the transfers itself.
According to the CFPB, since 2008, the Department of the Treasury has contracted with Comerica Bank to administer the Direct Express program, which allows federal beneficiaries to receive their monthly benefits payments through prepaid debit cards. Direct Express currently serves roughly 3.4 million Americans, the CFPB said. The cards are used to buy typical consumer needs: groceries, gasoline and more.
“Comerica is in charge of customer service for the millions of Americans using Direct Express, many of whom are unbanked,” the CFPB said. “Direct Express customers are captive to Comerica. Rather than making sure that there was sufficient customer service to handle calls from Social Security and other benefits recipients, Comerica cut corners to boost its bottom line. When people had problems with their accounts, it was often impossible to talk to someone who would help. The CFPB’s investigation found that Comerica failed to ensure sufficient staff and even intentionally disconnected more than 24 million calls.”
The bureau’s complaint does not outline the amount of redress or CMP that it seeks, instead leaving that up to the court.
CFPB Sues Comerica Bank for Systematically Failing Disabled and Older Americans
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