CFPB Drops Lawsuit Against Comerica Bank Over Federal Benefits Program

The Consumer Financial Protection Bureau (CFPB) reportedly dropped a lawsuit against Comerica Bank that targeted the bank’s handling of a federal benefits program, alleging that it provided poor service to the recipients of benefits.

The Bureau told a U.S. District Court in a filing submitted Friday (April 11) that it was dismissing the suit, Reuters reported Friday.

The CFPB sued Comerica Bank in December, targeting the bank’s handling of the Direct Express program, which it had 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.

In its complaint, the CFPB alleged 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.

“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,” then-CFPB Director Rohit Chopra said at the time in a press release.

Reached by PYMNTS on the day the lawsuit was announced, Comerica Bank said in an emailed statement that it would continue to defend its record as the financial agent for the Direct Express program and that it filed a lawsuit against the CFPB in November 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.”

It was reported in March that the CFPB asked a federal judge to pause the enforcement action that the agency filed against Comerica Bank.

CFPB Chief Legal Officer Mark Paoletta said in court papers that the agency was considering next steps and that the new CFPB leadership sought “time to review the matter,” Reuters reported March 3.