Federal Reserve Board takes action to address consumer compliance breakdowns by Green Dot, fining the firm $44 million for numerous unfair and deceptive practices and a deficient consumer compliance risk management program
The Federal Reserve Board took action to address consumer compliance breakdowns by Green Dot, fining the firm $44 million for numerous unfair and deceptive practices and a deficient consumer compliance risk management program. Green Dot violated consumer law in its marketing, selling, and servicing of prepaid debit card products, and its offering of tax return preparation payment services. For example, Green Dot failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third party’s website. The firm also blocked access to accounts of legitimate customers receiving unemployment benefits and lacked reasonable policies and procedures to help those customers cure those blocks. In addition, Green Dot did not maintain effective consumer compliance risk management and anti-money laundering programs.
The Board is requiring the firm to take several steps to improve these programs. Green Dot must hire an independent third-party to strengthen its consumer compliance risk management program and address the root causes of consumer complaints. The firm also must develop an effective anti-money laundering program and hire an independent third-party to conduct a review of certain transaction activities.Green Dot Corp., a company that partners with Walmart to sell prepaid debit cards at the retail giant, has been fined $44 million by the Federal Reserve for “numerous” alleged failures that harmed consumers over a period of at least five years.
The Fed identified instances of purported wrongdoing by Green Dot starting in 2017 and continuing through December 2022 that included failing to properly close accounts and assessing fees on them, and denying certain customers access to funds while offering inadequate ways for those customers to redress the situation. It also said Green Dot failed to notify customers that they could no longer register debit cards by phone after the company discontinued that service, and that it failed to properly disclose the fee it charged while partnering on tax-refund deposits with TurboTax.
In addition to the fine, Green Dot is required to implement numerous new compliance efforts that Federal Reserve regulators must approve.
