A Texas-based bank holding company has agreed to pay a $44 million fine to the Federal Reserve for a long list of alleged consumer protection violations.
The Federal Reserve Board of Governors says it has taken enforcement action against Green Dot for engaging in numerous unfair and deceptive practices and operating a non-compliant consumer risk management program.
The Fed says the bank engaged in unfair acts or practices between May 2020 and June 2020 when it froze access to prepaid accounts collecting Washington state unemployment benefits without reasonable policies and procedures.
From August 2020 to September 2020, the regulator says Green Dot engaged in an unfair act or practice when it froze customers’ access to their funds by extending the authorization of general purpose reloadable transactions for days.
The regulator says that between January 2017 and December 2022, Green Dot subsidiary Santa Barbara Tax Products Group (TPG) engaged in a deceptive act or practice by offering a ‘pay nothing out of pocket’ option to customers who want to prepare taxes.
From November 2017 to January 2021, the regulator says Green Dot misrepresented claims that its GPR prepaid debit card accounts would be closed once a customer’s balance reached zero. Green Dot charged many customers monthly recurring fees after the bank failed to close their accounts even after they reached the zero balance threshold.
The Fed also says Green Dot also engaged in a deceptive act or practice between June 2019 and December 2020, when it advertised that customers could open GPR accounts online or via a telephone. In reality, customers could only open GPR accounts online.
The Fed is requiring Green Dot to remedy its deficiencies, including by hiring an outside consultant to improve its consumer compliance risk management program and ensure that its services comply with consumer protection laws.
Green Dot has agreed to the Fed’s terms, without admitting or denying the regulator’s findings.
Green Dot is an American fintech company with over $4.817 billion in assets as of December 31, 2023.
Don’t miss a beat – Subscribe to receive email alerts straight to your inbox
Check price action
follow us on XFacebook and Telegram
Surf to the Daily Hodl mix
Generated image: Midjourney