The Consumer Financial Protection Bureau on Friday announced it had filed a lawsuit against Comerica Bank, accusing it of systematically harming three million Direct Express cardholders, many of whom rely on Social Security and other federal benefits. Comerica is alleged to have deliberately disconnected more than 24 million customer service calls, charged illegal ATM fees to more than one million cardholders, and mishandled fraud claims.
The allegations: The CFPB’s investigation unveiled a range of harmful practices that highlight Comerica’s failure to meet its obligations as the exclusive administrator of the Direct Express program, which distributes federal benefits to unbanked Americans via prepaid debit cards. Some of the key allegations include:
- Call Disconnections: Vendors hired by Comerica intentionally disconnected millions of customer service calls, leaving cardholders unable to address disputes or seek assistance. Those who weren’t disconnected often endured excessive wait times, sometimes exceeding several hours.
- Unlawful ATM Fees: Comerica’s vendors charged over one million cardholders ATM fees in situations where withdrawals should have been free, violating the terms of the Direct Express program.
- Fraud Mishandling: Cardholders reporting fraudulent enrollments into the Direct Express program were often misinformed. Investigations that confirmed fraud occurred were followed by inaccurate communications stating that no error was found, depriving victims of appropriate remedies.
- Failure to Investigate Errors: Under federal law, Comerica was required to investigate notices of account errors promptly. The CFPB found more than 20,000 instances where investigations were either delayed or not completed, leaving cardholders without answers or resolutions.
- Coercive Practices: To stop unauthorized transactions, Comerica often forced cardholders to close their accounts, resulting in delays in accessing funds and additional fees for expedited card replacements.
The impact: The CFPB’s complaint emphasizes the effects these practices had on vulnerable individuals, including senior citizens and disabled Americans. For many, Direct Express cards are their sole means of accessing federal benefits. Call disconnections and mishandled disputes frequently left cardholders unable to pay for basic needs like housing, utilities, and food.
