Consumer Financial Protection Bureau (CFPB) announced, December 6, that they sued Comerica Bank for systematically failing its 3.4 million Direct Express cardholders – primarily unbanked Americans receiving Social Security benefits.
California has the third highest amount of Comerica branch locations – 90, following behind Texas and Michigan.
The court document says Comerica, through its vendors, charged more than one million Direct Express cardholders ATM fees to access their government benefits in situations where they were entitled to free withdrawals.
In addition, CFPB says Comerica vendors intentionally terminated almost 25 million customer-service calls from cardholders waiting on hold.
Comerica provides around $3 billion in benefits
Since January 2008, Comerica has had an exclusive contract to administer the Direct Express program by providing prepaid cards and account services to recipients of certain benefits — Social Security and supplemental security income (SSI) for adults and children with disabilities, veterans’ pension and education assistance, civil service retirement, and others.
Comerica provides around $3 billion in benefits annually to approximately 4.5 million Direct Express cardholders.
Deficient customer service
According to the court document, since April 1, 2019, Comerica has impaired cardholders’ ability to protect and access their funds by routinely providing deficient customer service.
“For example, the Bank’s vendors have intentionally terminated almost 25 million customer-service calls from cardholders who were on hold before the cardholders could speak to a representative, and cardholders whose calls were not terminated have been frequently subjected to excessive wait times to speak with a representative, sometimes up to several hours,” says CFPB in the court document.
They go on to say that sometimes consumers contact Comerica alleging they have been fraudulently enrolled into the Direct Express program because someone has improperly created an account in their name.
“For example, Comerica, through its Vendors, frequently advised consumers that “no error occurred” even though the Bank had determined that there was, in fact, enrollment fraud,” says the court document.
In addition, they say Comerica refused to honor timely stop-payment requests and instead required cardholders to request a new debit card.
Cardholders were not able to access their own funds for a period of time and, when cardholders sought to minimize their time without a card, Comerica charged them fees to expedite delivery.
Illegal ATM fees
Between April 1, 2019 and April 30, 2024, Comerica vendors, charged cardholders ATM fees that they did not owe.
A disclosure provided to cardholders said they were entitled to one free ATM withdrawal per month per deposit of funds into their Direct Express accounts. Comerica vendors assesses a fee for each additional withdrawal.
The disclosure also confirmed that “There is no ATM denial fee associated with this account.”
Comerica vendors reset cardholders’ free ATM withdrawal benefit days before benefits were accessible, creating a 1-5 day gap. During this time, failed ATM withdrawals could unknowingly use the free withdrawal for the month, with no notification to cardholders.
When a cardholder in this situation later successfully completed the first transaction after the newly deposited funds became available for withdrawal, Comerica’s vendors charged the cardholder an ATM withdrawal fee for the transaction.
Comerica charged more than 1 million Direct Express cardholders ATM fees for withdrawals that should have been free.
Victims’ relief fund
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts and practices.
The CFPB’s lawsuit seeks to stop Comerica’s unlawful conduct, to provide redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.
Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
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