Financial Watchdog Cracks Down on Comerica Bank Over Mismanaged Benefits Program
The Consumer Financial Protection Bureau (CFPB) has filed a complaint against Comerica Bank, alleging that the regional bank failed to properly administer a federal benefits program that utilizes prepaid debit cards. The lawsuit claims that Comerica Bank intentionally terminated over 24 million customer service calls, charged over 1 million cardholders unnecessary ATM fees, and mishandled fraud complaints while providing federal benefits through the Direct Express prepaid debit card program.
A Critical Safety Net for Vulnerable Americans
The Direct Express program is a prepaid card that beneficiaries of Social Security and other federal programs can use to pay for essential expenses such as groceries and gas. Many of these individuals are disabled, elderly, and lack access to traditional banking services. Comerica Bank has been contracted with the Department of the Treasury since 2008 to administer the program and handle customer service for millions of Americans using the prepaid card.
CFPB Alleges Widespread Misconduct
According to the CFPB, Comerica Bank’s actions led to significant harm to these vulnerable individuals. “By deliberately disconnecting millions of calls and harvesting illegal junk fees, Comerica boosted its bottom line at the expense of Americans living on a fixed income,” said CFPB Director Rohit Chopra. The lawsuit alleges that Comerica Bank’s customer service was often inaccessible, leaving cardholders with nowhere to turn when they encountered problems with their accounts.
Comerica Bank Pushes Back
Comerica Bank has filed a complaint against the CFPB, arguing that the bureau has overreached in its handling of the case and failed to acknowledge the bank’s cooperation with the federal government. “Throughout the CFPB’s investigation, we have cooperated by sharing information and data to illustrate the unique nature of this program and the fact that we operate with the oversight of the Fiscal Service,” said Louis Mora, Comerica vice president of media relations.
A Pattern of Misconduct
This is not the first time the CFPB has taken action against banks for mishandling benefits. In 2022, the bureau fined Bank of America $100 million for mishandling state unemployment benefits in 2020 and 2021. The Office of the Comptroller of the Currency also fined the bank $125 million in a separate order.
The Fight for Accountability Continues
The CFPB’s complaint against Comerica Bank is a crucial step towards holding financial institutions accountable for their actions. As the watchdog continues to investigate and take action against banks that prioritize profits over people, vulnerable Americans can hope for a more just and equitable financial system.
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