The Federal Reserve Board on Friday 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.
