Comerica Bank Sued Over Federal Benefits Program

Comerica Bank Accused of Mismanaging Federal Benefits Program

A Comerica Bank sign on a building in Walnut Creek, California, March 30, 2023.

The Consumer Financial Protection Bureau (CFPB) has filed a complaint against Comerica Bank, accusing the regional bank of failing to administer a federal benefits program that uses prepaid debit cards. The lawsuit alleges that Comerica Bank intentionally terminated over 24 million customer service calls, charged over 1 million cardholders ATM fees they didn’t owe, and mishandled fraud complaints while providing federal benefits through the Direct Express prepaid debit card program.

Direct Express Program and its Issues

The Direct Express program is a prepaid card that beneficiaries of Social Security and other federal programs can use to pay for expenses such as groceries and gas. Comerica Bank has been contracted with the Department of the Treasury since 2008 to administer the program and handle customer service for the millions of Americans using the prepaid card, many of whom are disabled and older and don’t have a bank.

Despite the program’s website advertising 24/7 customer service, the CFPB alleges that when people had problems with their accounts, it was often impossible to talk to someone who would help. The CFPB claims that Comerica Bank’s actions have caused harm to vulnerable individuals who rely on the program for their daily needs.

Comerica Bank’s Response

Comerica Bank has filed an earlier complaint against the CFPB, arguing that the bureau has overstepped its bounds and failed to acknowledge that the bank acted with the oversight and knowledge of the federal government. The bank claims that it has cooperated with the CFPB’s investigation, sharing information and data to illustrate the unique nature of the program and the fact that it operates with the oversight of the Fiscal Service.

CFPB’s Previous Actions

The CFPB has taken action against banks for mishandling benefits in the past, including in 2022 when 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.

Conclusion

The CFPB’s complaint against Comerica Bank highlights the importance of effective oversight and accountability in the administration of federal benefits programs. The CFPB’s actions aim to ensure that vulnerable individuals receive the support they need to access essential services and maintain their financial stability.

FAQs

Q: What is the Direct Express program?
A: The Direct Express program is a prepaid debit card that beneficiaries of Social Security and other federal programs can use to pay for expenses such as groceries and gas.

Q: What is the purpose of the CFPB’s complaint against Comerica Bank?
A: The CFPB’s complaint accuses Comerica Bank of failing to administer the Direct Express program effectively, intentionally terminating customer service calls, charging unnecessary fees, and mishandling fraud complaints.

Q: What is Comerica Bank’s response to the CFPB’s complaint?
A: Comerica Bank has filed an earlier complaint against the CFPB, arguing that the bureau has overstepped its bounds and failed to acknowledge the bank’s actions were taken with the oversight and knowledge of the federal government.