The Federal Reserve Board this past Friday reportedly 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 Corporation (NYSE: GDOT) is said to have 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 allegedly 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 now focus on “developing an effective anti-money laundering program and hire an independent third-party to conduct a review of certain transaction activities.”
As covered, Green Dot is a financial technology and registered bank holding company committed to “delivering money management and payment solutions to customers and partners, seamlessly connecting people to their money.”
Green Dot’s proprietary technology enables it to “build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.”
Green Dot offers a broad set of financial services “to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements.”
Its flagship digital banking platform GO2bank “offers consumers simple and accessible mobile banking designed to help improve financial health over time.”
The company’s banking platform services business “enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.”
Founded in 1999, Green Dot has served “more than 33 million customers directly and many millions more through its partners.”
The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.”
Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC.