The Federal Reserve Board said Friday (July 19) that it fined Green Dot $44 million for unfair and deceptive practices and a deficient consumer compliance risk management program.
The regulator said in a Friday press release that while marketing, selling and servicing its prepaid debit card products and its tax return preparation payment services, Green Dot violated consumer law.
Specifically, the Federal Reserve Board said, the company failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third-party’s website; blocked access to the accounts of legitimate customers receiving unemployment benefits; lacked reasonable policies and procedures to help those customers solve those blocks; and failed to maintain effective consumer compliance risk management and anti-money laundering (AML) programs.
“The Board is requiring the firm to take several steps to improve these programs,” the regulator said in the release. “Green Dot must hire an independent third-party to strengthen its consumer compliance risk management programs and address the root causes of consumer complaints. The firm must also develop an effective anti-money laundering program and hire an independent third-party to conduct a review of certain transaction activities.”
In a Friday statement addressing this consent order, George Gresham, director, CEO and president of Green Dot, said that the company announced earlier this year that it was expecting a public enforcement action from the Federal Reserve, that it has been working closely with the regulator and that it is pleased that the consent order has been finalized.
“As we shared previously, the order relates to practices in place years ago, and 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 in the statement.
Green Dot will work closely with the Federal Reserve Board to address and comply with all concerns noted in the consent order, he added.
“We remain 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,” Gresham said.
Gresham assumed the roles of CEO and president at Green Dot in October 2022, having previously served as the company’s chief financial officer and chief operating officer, as well as serving as a member of the board.
