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.
In response to the Fed’s announcement, Green Dot CEO George Gresham asserted that the company would strive to correct any and all deficiencies within Green Dot’s compliance program. “We have taken and will continue taking meaningful steps to correct and remediate those issues, including significant updates to our processes, our product packaging and marketing, our management team and our compliance programs,” Gresham said. “We are committed to cooperating and partnering closely with our regulators to ensure all concerns noted in the consent order are addressed and complied with and that our customers are well-served and protected on an ongoing basis.
Fed Orders Green Dot to Improve Compliance and Address Complaints
The Board is requiring the firm to take several steps to improve these programs. Green Dot is now required to 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 to determine whether any suspicious activity conducted through the bank was properly identified and reported.
In his response, Gresham concluded by stating that the bank “remains optimistic about our financial and regulatory positions as well as our future growth potential and opportunity as we serve and empower customers directly and through our partners.” 