CFPB v. Comerica: Protecting Benefits Recipients From Banking Abuses
How alleged failures in the Direct Express program put disabled and older Americans at risk and what federal law requires from banks.
The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Comerica Bank, alleging that the bank illegally harmed millions of people who rely on federal benefits like Social Security, disability payments, and veterans’ benefits. The case focuses on Comerica’s role in managing the Direct Express prepaid debit card program, which is widely used by unbanked and underbanked Americans to access their government benefits.
This article explains what the CFPB says Comerica did wrong, how those actions affected disabled and older Americans, the legal protections that apply, and what consumers can do if they experience similar problems.
Direct Express and Comerica’s Role
Most people receiving federal benefits can choose where their money is deposited, but millions receive their funds on a Direct Express prepaid debit card instead of into a traditional bank account. Since 2008, the U.S. Department of the Treasury has contracted with Comerica Bank to operate this program.
Under that contract, Comerica is responsible for:
- Issuing and managing Direct Express cards for federal benefits recipients
- Providing customer service to cardholders
- Handling fraudulent transaction claims and account error disputes
- Ensuring compliance with consumer protection laws such as the Electronic Fund Transfer Act (EFTA) and Regulation E
Because many Direct Express users are unbanked and have few alternatives, they are effectively a captive customer base. Their ability to pay for basic needs—like food, medication, rent, and transportation—depends on uninterrupted access to these cards and timely help when something goes wrong.
Who Was Allegedly Harmed?
The CFPB alleges that Comerica’s practices harmed approximately 3.4 million Direct Express cardholders, many of whom are:
- Older adults relying on Social Security retirement benefits
- People with disabilities receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)
- Other low-income or unbanked Americans who depend primarily on federal benefits for monthly living expenses
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These groups generally face heightened financial vulnerability and may have limited access to alternative banking services or credit. When benefits are delayed, inaccessible, or improperly reduced by fees, recipients can quickly fall behind on rent, utilities, medical bills, and other essentials.
Key CFPB Allegations Against Comerica
According to the CFPB’s public filings and enforcement summary, Comerica engaged in a pattern of conduct that violated consumer protection laws and contractual obligations in several ways. The main allegations can be grouped into five categories.
1. Blocking or Undermining Access to Customer Service
The CFPB alleges that Comerica failed to provide a reasonable way for Direct Express users to obtain timely assistance with their accounts, especially when they reported fraud or errors.
- Millions of calls dropped: Comerica’s vendors allegedly intentionally disconnected over 24 million customer service calls before consumers could reach a live representative.
- Excessive wait times: Callers who were not cut off often faced wait times that could stretch into several hours, making it extremely difficult to report problems or exercise legal rights.
- Impeded access to protections: Because federal law often requires consumers to act within specific timelines to obtain error resolution or reimbursement, making it hard to reach customer service can effectively strip consumers of protections granted under EFTA and Regulation E.
2. Charging Illegal or Improper ATM Fees
The CFPB asserts that more than 1 million Direct Express cardholders were charged ATM fees they did not legally owe when withdrawing their federal benefits.
- Regulations and program rules require that certain withdrawals of federal benefits be available without fees in specified circumstances.
- Despite this, Comerica allegedly permitted or imposed ATM charges that violated these rules, reducing the net benefits available to low-income and fixed-income cardholders.
For beneficiaries living on modest monthly payments, even a few dollars in unlawful fees can be significant, particularly when those fees are repeated each month.
3. Mishandling Fraud, Errors, and Disputes
Under the Electronic Fund Transfer Act and its implementing regulation (Regulation E), when a consumer reports an unauthorized transaction or an account error, financial institutions generally must:
- Promptly investigate the complaint
- Resolve the error within prescribed timelines
- Provide written notice of investigation results and reasoning
The CFPB alleges that Comerica repeatedly failed to meet these requirements for Direct Express customers:
- Untimely investigations: The bank allegedly failed to investigate potential errors within legal timelines more than 20,000 times.
- Insufficient explanations: When investigations were conducted, Comerica allegedly sent vague, confusing, or incomplete responses that did not clearly explain outcomes or consumer rights.
- Dismissed legitimate fraud claims: In some cases, consumers who said they were fraudulently enrolled in Direct Express were told that “no error occurred,” even when Comerica had evidence of enrollment fraud.
4. Forcing Consumers to Give Up Legal Protections
The CFPB contends that Comerica used contractual terms and procedures that effectively pushed consumers to waive protections they are entitled to under federal law.
- Improper stop-payment requirements: Comerica required cardholders who wanted to stop a preauthorized electronic payment to contact the merchant directly and request cancellation.
- Conflict with Regulation E: Regulation E generally requires the financial institution, not the consumer, to honor timely stop-payment requests and prevent certain future transfers.
- Forced account closure: In many cases, cardholders were told they had to close their accounts entirely to prevent further preauthorized charges, often triggering additional fees and delays in reissuing cards.
5. Forcing Account Closures and Delaying Access to Benefits
According to the CFPB, Comerica’s vendors frequently told Direct Express users that the only way to stop problematic charges was to close their cards and open new ones.
- Extra fees for replacement cards: Many cardholders had to pay to expedite new card delivery to regain timely access to benefits, effectively penalizing them for trying to exercise their rights.
- Interruptions in access: Closing an account can delay access to funds when new cards are not activated or delivered on time, which can be especially harmful for individuals who depend entirely on these benefits for daily living expenses.
Alleged Harms to Disabled and Older Americans
The CFPB’s complaint emphasizes how these practices disproportionately harmed populations already facing structural disadvantages.
| Group Affected | Type of Harm | Potential Consequences |
|---|---|---|
| Older adults on Social Security | Disconnected calls, unlawful fees, stalled error resolution | Missed rent or utility payments; late fees; hardship purchasing food or medicine |
| People with disabilities on SSI/SSDI | Difficulty reporting fraud or card theft; forced account closure | Loss or delay of essential income; inability to pay for support services and healthcare |
| Unbanked or underbanked consumers | Limited alternatives if Direct Express fails | Reliance on costly alternatives like check cashers or payday lenders; deeper financial instability |
Legal Framework: What the CFPB Says Was Violated
The lawsuit draws on several key consumer finance laws and standards.
Consumer Financial Protection Act (CFPA)
The Consumer Financial Protection Act empowers the CFPB to act against institutions that engage in unfair, deceptive, or abusive acts or practices (UDAAP). A practice is generally considered:
- Unfair when it causes or is likely to cause substantial injury that consumers cannot reasonably avoid and which is not outweighed by benefits
- Desceptive when it misleads or is likely to mislead consumers and is material to their decisions
- Abusive when it takes unreasonable advantage of consumers’ lack of understanding, inability to protect their interests, or reliance on a covered person
The CFPB alleges that Comerica’s combination of dropped calls, misleading communications, and improper terms meets these standards.
Electronic Fund Transfer Act (EFTA) and Regulation E
The Electronic Fund Transfer Act and Regulation E govern electronic transactions like ATM withdrawals, debit card purchases, and preauthorized transfers. Among other things, they:
- Require timely investigation of alleged errors
- Set deadlines for providing provisional credits and final determinations
- Mandate written explanations of findings after error investigations
- Require financial institutions to honor proper stop-payment requests
The CFPB’s enforcement record indicates that Comerica allegedly repeatedly failed to meet these obligations in its handling of Direct Express cardholders.
What the CFPB Is Seeking
In its lawsuit and related enforcement materials, the CFPB requests several forms of relief:
- Injunctive relief: A court order requiring Comerica to stop the alleged unlawful practices and ensure adequate customer service and compliance going forward.
- Redress for affected consumers: Refunds or monetary relief for harmed Direct Express cardholders, including reimbursement of illegal fees and compensation for losses tied to mishandled fraud or error claims.
- Civil money penalties: Financial penalties paid by Comerica, which would be directed to the CFPB’s Victims Relief Fund for distribution to consumers harmed by violations of consumer financial law.
The CFPB has a history of using such enforcement tools to address systemic misconduct in consumer finance markets, especially when federal benefits or other safety-net programs are involved.
Why This Case Matters Beyond Direct Express
Although the case focuses on a single prepaid card program, it raises broader questions about how banks treat vulnerable customers and administer government-linked financial products.
- Dependence on contracted banks: When federal agencies rely on private institutions to deliver benefits, failures by those institutions can effectively become failures of the benefits system itself.
- Growing use of prepaid and electronic benefits: As paper checks are phased out, more people depend entirely on electronic transfers and cards, making error resolution and fraud handling even more critical.
- Intersection with disability and aging: Problems accessing benefits can compound existing barriers faced by older adults and people with disabilities in housing, healthcare, and employment.
Practical Guidance for Benefits Recipients
While the lawsuit proceeds, recipients of Social Security and other federal benefits can take several steps to protect themselves.
Document Problems Quickly
- Keep a written record of dates, times, and details of calls or online chats with your card issuer or bank.
- Save copies or screenshots of disputed transactions and any error or fraud notifications you submit.
- Follow up in writing (email or letter) when possible to create a clear paper trail.
Know Basic Rights Under Regulation E
- You generally have a limited time window—often 60 days from the date of a statement or posting—to report unauthorized transactions for full protection.
- The institution must investigate and resolve your complaint within specified deadlines or provide provisional credit if more time is needed.
- You can request written explanations of investigation outcomes.
Escalate Complaints When Necessary
- If you cannot resolve an issue with your bank or card provider, you may submit a complaint to the CFPB through its website or by phone, as the agency publicly encourages.
- Legal assistance organizations and legal aid providers may help consumers whose only income is from federal benefits, particularly when benefits access is jeopardized.
Frequently Asked Questions (FAQs)
Q1: What is the Direct Express card, and who uses it?
Direct Express is a prepaid debit card used to distribute federal benefits such as Social Security, SSI, and veterans’ benefits to people who may not have traditional bank accounts. Millions of older adults, people with disabilities, and low-income individuals rely on it to pay everyday expenses.
Q2: Why did the CFPB sue Comerica Bank?
The CFPB alleges that Comerica systematically failed Direct Express cardholders by dropping millions of customer service calls, charging illegal ATM fees, mishandling fraud and error disputes, and imposing improper requirements that weakened consumer protections guaranteed by law.
Q3: What laws does the lawsuit say Comerica violated?
According to the CFPB, Comerica violated the Consumer Financial Protection Act’s prohibitions on unfair, deceptive, or abusive acts or practices and repeatedly failed to comply with the Electronic Fund Transfer Act and Regulation E in how it handled Direct Express accounts and disputes.
Q4: How could dropped customer service calls be illegal?
When consumers are effectively blocked from reporting fraud, stopping unauthorized transfers, or filing error disputes within required timelines, they may lose protections provided by law. The CFPB argues that Comerica’s practices impeded cardholders’ ability to exercise their rights under EFTA and Regulation E, which can constitute an unfair or abusive practice.
Q5: What can I do if I think my benefits card provider mishandled my fraud claim?
You should promptly document the issue, submit a written dispute to the provider, and request confirmation of receipt and a written explanation of the investigation’s outcome. If the problem is not resolved, you can file a complaint with the CFPB and consider contacting legal aid or consumer law attorneys, especially if your only income is federal benefits.
References
- CFPB Sues Comerica Bank for Systematically Failing Disabled and Older Americans — Consumer Financial Protection Bureau. 2024-12-09. https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-comerica-bank-for-systematically-failing-disabled-and-older-americans/
- Comerica Bank – Enforcement Action Summary — Consumer Financial Protection Bureau. 2024-12-09. https://www.consumerfinance.gov/enforcement/actions/comerica-bank/
- CFPB drops lawsuit against Comerica Bank, without prejudice — American Banker. 2025-02-14. https://www.americanbanker.com/news/cfpb-drops-lawsuit-against-comerica-bank-without-prejudice
- Electronic Fund Transfer Act (Regulation E) — Board of Governors of the Federal Reserve System. 2022-06-01. https://www.federalreserve.gov/supervisionreg/regulation-e.htm
- Chapple v. Comerica — New York Legal Assistance Group (NYLAG). 2021-10-05. https://nylag.org/chapple/
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