Update – Lawsuit Dismissed; Plaintiffs Have Chance to Refile
The lawsuit detailed on this page was dismissed without prejudice on January 23, 2020. The stipulation of dismissal can be readhere.
At this time, ClassAction.org has no further information regarding the dismissal.In January, BankingDive.com reported that Comerica Bank will for at least the next five years continue operating the Department of the Treasury’s Bureau of the Fiscal Service’sprepaid debit card programfor Social Security recipients and veterans. The new contract between Comerica and the federal government reportedly “implements rigorous customer service requirements, requires more reporting, reduces cardholder fees for certain transactions, and lowers the overall cost to the federal government from the previous agreement.”
Seven consumers have put their names on a proposed class action lawsuit in which they allege defendants Conduent Business Services, Comerica, Inc. and Comerica Bank have continued to misrepresent that the Direct Express federal benefits debit MasterCard program is completely safe despite possessing awareness that the cards are vulnerable to fraud and bound to systems “rife with fraudulent transactions.”
The lawsuit explains that Conduent, through its Direct Express trademark, administers federal benefits payments nationwide to benefit recipients of at least nine federal agencies. Conduent’s U.S. Treasury-recommended Direct Express card, the case notes, is a prepaid card for federal benefit recipients who don’t have a bank or credit union account. The card can be used at stores that accept Debit MasterCard, or to pay bills, purchase money orders, or withdraw cash from an ATM that displays the MasterCard logo, with Comerica Bank overseeing the entire program, the suit says.
The timeline in the lawsuit draws back to 2014, when Comerica Bank’s contract to oversee the federal Direct Express benefits program was renewed, the case says, despite “some criticism” from the Treasury’s Office of Inspector General with regard to how the program was being run. In June 2018, per the lawsuit, the Office of Inspector General issued to the Treasury an engagement memo that notified the Bureau of Fiscal Service of a follow-up audit to determine what, if anything, had been done with regard to 14 recommendations for the Direct Express program included in the 2014 and 2017 Inspector General audits. From the suit:
“Among the recommendations included in the audits was that the Direct Express® program assess the costs and burden of the program to the cardholders; establish a quality assurance surveillance plan to monitor and document Comerica’s performance, including service-level requirements; track Comerica’s revenues and expenses; and periodically assess whether the bank’s compensation is ‘reasonable and fair.’”
In August 2018, the case goes on, Comerica Bank senior vice president and director of government electronic solutions Nora Arpin revealed in an interview published byAmerican Bankerthat the Direct Express program’s security system had been breached. The acknowledgment, the suit says, prompted Senator Elizabeth Warren to open an investigation into Comerica Bank, which revealed that hundreds of Direct Express customers were affected by fraud without being adequately informed of such. All this brings us to the plaintiffs’ allegations:
“Thus, despite knowing of all the problems with fraud highlighted by Senator Warren and the American Banker, Defendants misrepresent to their customers that the Direct Express® program is completely safe.
In reality, Direct Express® cards are unsafe and Defendants’ systems are rife with fraudulent transactions.”