Green Dot, which works with retail giant Walmart to sell prepaid debit cards on the retailer, has been fined $44 million by the Federal Reserve for “numerous” alleged deficiencies that harmed consumers over a period of at least five years.
In a Friday announcement, Federal Reserve Said Austin-based Green Dot violated consumer law and engaged in unfair and deceptive practices that resulted in users losing access to their money.
Federal Reserve Identified Green Dot’s alleged misconduct between 2017 and December 2022 included failing to properly close accounts and charging fees, and leaving certain customers unable to access their funds while failing to provide them with recourse to remedy the situation.
The lawsuit also said Green Dot failed to inform customers that they could no longer register their debit cards over the phone after it discontinued the service, and failed to properly disclose fees it charged TurboTax when it partnered with the company for tax refund deposits.
In addition to the fine, Green Dot is required to implement a number of new compliance measures that require approval from Federal Reserve regulators.
Last year, NBC News report The issues faced by Green Dot cardholders have been extended beyond the deadline specified by the Federal Reserve, with affected customers saying: “nightmare” In August 2023, scenarios emerged where invoices could not be paid on time due to lack of timely access to funds.
A Green Dot spokesperson said most of the issues identified in the NBC News report were due to system upgrades.
In a statement on Friday“We are pleased to confirm that the consent order has been finalized,” Green Dot CEO George Gresham said in a statement.
“This order relates to practices implemented several years ago, and we have taken, and will continue to take, meaningful steps to correct and improve these issues, including significant updates to our processes, product packaging and marketing, management team, and compliance programs,” Gresham said.
“We are committed to addressing and complying with all of the concerns raised in the consent order and to working closely and partnering with regulators to ensure our customers continue to be well served and protected. As stewards of our clients’ valuable resources, we take this commitment and responsibility very seriously.”
Representatives for Walmart and TurboTax parent company Intuit did not immediately respond to emailed requests for comment.
