CFPB Sues Comerica Bank For Allegedly Mishandling Disabled and Older Americans’ Accounts

KEY TAKEAWAYS

• The Consumer Financial Protection Bureau (CFPB) is suing Comerica Bank for deliberately disconnecting customer service calls, charging illegal fees, disregarding and misleading fraud victims, and imposing illegal terms of service on its Direct Express cardholders.
• The 3.4 million Direct Express cardholders under Comerica Bank are largely disabled and older Americans who receive monthly benefits through prepaid 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.

The Consumer Financial Protection Bureau (CFPB) is suing Comerica Bank for allegedly hanging up on customer service calls, misleading, and charging illegal fees to its 3.4 million Direct Express cardholders.

Comerica Bank is a subsidiary of Comerica Inc. (CMA), and since 2008, the U.S. Department of Treasury has contracted with the bank to administer the Direct Express program. This program allows beneficiaries of federal programs like Social Security to receive their monthly benefits payments on prepaid debit cards. 

Many Direct Express customers are unbanked and “captive to Comerica,” CFPB said.

“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,” said Rohit Chopra, CFPB director, in a prepared 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 announced in November that it will transfer its Direct Express contract to The Bank of New York Mellon Corporation (BK) starting in January 2025.

What Is the CFPB Alleging Comerica Did?

The CFPB said Comerica deliberately disconnected more than 24 million customer service calls before they could reach a representative. 

Over a million customers were allegedly charged ATM fees when they could legally withdraw government benefits for free. In addition, the bank required thousands of cardholders to close their accounts, which led to additional fees, the CFPB said.

The bank also allegedly misled fraud victims as bank vendors would tell consumers that “no error occurred” even if the bank had determined there was enrollment fraud. The CFPB said Comerica did not properly investigate incorrect or potentially fraudulent charges over 20,000 times.

Comerica had also required their customers to contact and request merchants to stop pre-authorized payment transfers from their accounts when the bank was legally required to stop the transfer itself.

The bureau is asking the court to order Comerica to stop these practices, refund affected customers, and pay penalties into the CFPB’s victim relief fund. Comerica’s stock was down 0.8% around midday.