Getty Images/Bloomberg Contributor
Takeaways from the Key Notes
- Consumer Financial Protection Bureau is suing Comerica Bank over its illegal service terms, for intentionally disconnecting calls to customer service, charging unjustified fees, ignoring and misleading victims of fraud, as well as charging unfair and illegal charges.
- Comerica Bank has 3.4 Million Direct Express Cardholders, mainly disabled Americans. They receive benefits monthly through pre-paid debit cards.
- The bureau is asking for the bank to stop these practices, refund affected customers and pay civil penalties into the CFPB's victim relief fund.
Consumer Financial Protection Bureau, (CFPB), is suing Comerica Bank, claiming that it has hung up on its Direct Express Cardholders, misled them, and charged illegal fees.
Comerica Bank, a subsidiary of Comerica Inc.(CMA), has been contracted by the U.S. Department of Treasury to manage the Direct Express Program since 2008. Beneficiaries of federal benefits programs, such as Social Security, can receive monthly payments via prepaid debit card.
Direct Express is a popular service for customers without bank accounts. “captive to Comerica,” CFPB stated.
“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,” Rohitchopra, CFPB Director, said in a written statement.
On Nov. 8, Comerica Bank filed a lawsuit against the CFPB's regulatory overreach and handling of the case, "which undermined the legitimacy of its own investigation," said Louis Mora, Comerica's vice president of media relations, in an email.
"Today, the CFPB doubled down by filing a countersuit against Comerica Bank," Mora said. "We will continue to vigorously defend our record as the financial agent for the Direct Express program and remain committed to serving our cardholders."
The Department of Treasury, in November 2018, announced that the contract for Direct Express would be transferred to The Bank of New York Mellon Corporation BK in January 2025.
What is the CFPB alleging Comerica did?
According to the CFPB, Comerica intentionally disconnected over 24 million calls from customers before they reached a customer service representative.
According to reports, over a million people were charged ATM fees even though they had the right to withdraw their government benefits free of charge. The CFPB stated that thousands of account holders were also required to close accounts by the bank, which led them to incur additional fees.
Fraud victims also claim that the bank misled them, as vendors of banks would inform consumers they were fraud victims. “no error occurred” The bank would still be able to investigate the fraud even if it had already determined enrollment fraud. The CFPB stated that Comerica had not investigated incorrect or fraudulent charges more than 20,000 times.
Comerica also asked their customers to ask merchants to stop any pre-authorized payments transfers when they were legally obliged to do so themselves.
Bureau asks court for order to comerica stop this practice, reimburse affected customers and pay fines into the CFPB victim relief fund. Comerica's stock was down 0.8% around midday.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
