Federal Reserve Board Green Dot fined $44 million The company filed complaints of fraud and deficiencies in its risk management program on Friday.
According to the Fed, Green Dot violated the law in marketing, selling and servicing its prepaid debit card products. The bank also allegedly violated the law between 2017 and 2022 through its provision of tax return preparation payment services, including by failing to properly disclose refund processing fees.
in Prepared Statement Following Announcement of Federal Reserve Consent OrderGreen Dot CEO George Gresham said: Previous claims The order relates to an issue that occurred several years ago.
“[W]”The company has taken and continues to take meaningful steps to correct and improve these issues, including significant updates to its processes, product packaging, marketing, management team and compliance program,” Gresham wrote. “The company is committed to working closely and partnering with regulators to address and comply with all of the concerns raised in the consent order and ensure that customers continue to be well served and protected.”
“As stewards of our clients’ valuable resources, we take this commitment and responsibility very seriously,” he added.
In the consent order, the Feds alleged that between 2017 and 2021, Green Dot misrepresented fees for its reloadable debit card products, saying that accounts would be closed when customers’ balances reached zero. Those accounts were not closed, which resulted in the fees accruing.
The Fed also Green Dot blocks access to unemployment benefit recipients’ accounts Issues arose in May and June 2020, and furthermore, policies and procedures were not in place to help those customers resolve the issues.
Pursuant to the consent order, Green Dot is required to hire a third party to review its transaction monitoring history from Aug. 1, 2021 through Oct. 31, 2022 to determine whether suspicious activity conducted through the bank was properly identified and reported, and the bank must then report the results of its investigation to the San Francisco Fed.
It is also required to develop and submit to the San Francisco Fed within 90 days a plan to improve the board’s oversight of its consumer compliance risk management program, and to develop and submit a revised Bank Secrecy Act/anti-money laundering compliance program.
In a prepared statement, Gresham said the bank “[s] We are optimistic about our financial and regulatory position, as well as the potential and opportunities for future growth as we serve and empower our clients both directly and through our partners.”
The consent order is The lawsuit was filed last week Dino Di Blasio, a former Green Dot employee, alleged that company executives misrepresented the performance of key business lines and were aware of the problems that led to a costly Federal Reserve consent order.
Green Dot declined to comment on last week’s lawsuit.
