CFPB Sues Comerica Bank Over Handling of Federal Benefits Program

The Consumer Financial Protection Bureau (CFPB) sued Comerica Bank Friday (Dec. 6), alleging that the bank committed violations that include hanging up on customer service calls and charging illegal ATM fees.

The agency’s complaint centers on the Direct Express program, which Comerica Bank has administered on behalf of the Department of the Treasury since 2008 and enables about 3.4 million federal beneficiaries to receive their monthly benefits payments through prepaid debit cards, the CFPB said in a Friday press release.

In its complaint, the CFPB alleges that Comerica Bank deliberately disconnected customer service calls, charged consumers illegal ATM fees, misled fraud victims, imposed illegal terms of service on consumers seeking to stop payments, failed to investigate account problems and forced consumers to close accounts to stop preauthorized payments, according to the release.

“The CFPB is suing Comerica Bank for illegally harming disabled and older Americans who count on Social Security and other federal benefits,” CFPB Director Rohit Chopra said in the release. “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.”

Reached by PYMNTS, Comerica Bank said in an emailed statement that it will continue to defend its record as the financial agent for the Direct Express program and that it filed a lawsuit against the CFPB on Nov. 8 challenging the bureau’s “regulatory overreach and its handling of this case.”

“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,” the statement said. “Despite our good faith efforts to provide this critical context, the CFPB has consistently ignored our arguments and documentation.”

Comerica Bank said in the statement that the Direct Express program is complex, as it funds 3.4 million cardholders largely over a period of one to two days each month.

In its lawsuit, the CFPB asks the court to order Comerica Bank to halt the alleged illegal activities, provide refunds to the affected customers and pay a civil penalty that would go to the agency’s victims relief fund, according to the release.

The Department of the Treasury’s Bureau of the Fiscal Service said in November that it selected the Bank of New York Mellon (BNY) to serve as the financial agent for the Direct Express program, beginning Jan. 3 and lasting five years.

“This new agreement will further our goals of delivering a modern customer experience and strengthening Treasury’s commitment to paying the right person, in the right amount, at the right time,” Fiscal Service Commissioner Tim Gribben said in a Nov. 21 press release.

Comerica Bank said in a statement released the same day that it entered into a three-year extension of services to enable an orderly transition to the new financial agent.