Dallas, Texas — A significant legal action involving Comerica Bank and the Consumer Financial Protection Bureau (CFPB) was recently dismissed, signaling a shift in enforcement strategies under different U.S. presidential administrations. The CFPB opted to drop a lawsuit against Comerica without explanation, a move that allows for the case to potentially be reopened in the future.
This legal decision follows a Texas judge’s refusal last month to pause the lawsuit, criticizing the bureau’s lack of justification for how a stay would serve the cause of justice. Originally, the CFPB filed a single-sentence dismissal at the U.S. District Court for the Northern District of Texas, which did not provide reasons for the action against the Dallas-based bank with $79.3 billion in assets.
In December, the CFPB had leveled serious accusations against Comerica, asserting that the bank disconnected 24 million customer service calls deliberately. These allegations pertained especially to Comerica’s handling of the Direct Express program, under which the U.S. Treasury Department issues prepaid debit cards to disburse government benefits like disability and Social Security payments to individuals without a bank account.
In its lawsuit, the CFPB accused Comerica of engaging in "unfair acts and practices," and sought permanent injunctions, consumer compensation, and civil penalties. Details on how affected consumers might recoup losses were not disclosed following the dismissal of the case.
The CFPB had also charged that Comerica hindered clients from reasonably addressing fraud disputes and accessing their Direct Express accounts. More pointedly, the bank failed to adhere to certain consumer protections mandated under Regulation E, tied to the Electronic Fund Transfer Act. Allegedly, Comerica enforced account closures and reissued cards, unnecessarily levying additional fees on customers rather than honoring stop payment requests.
Further infractions included charges of incorrect ATM fee levying, prolonged and inadequate handling of fraud investigations, and failures in reporting investigation outcomes to cardholders. The bank was also accused of not providing written explanations of their investigative findings, breaching responsibilities established by Regulation E.
Scrutiny over Comerica’s management of the Direct Express contract ascended following a 2023 article by American Banker, which referenced internal bank documents revealing compliance issues. According to these documents, a Comerica executive admitted to a "serious contract violation" due to the outsourcing of fraud dispute resolution and cardholder data management to a third-party vendor in Lahore, Pakistan.
In a related development, the Treasury Department in November transitioned the Direct Express contract to the Bank of New York Mellon, reflecting a decision many had anticipated given the criticisms directed at Comerica.
This series of developments highlights the evolving dynamics between regulatory bodies and financial institutions, underlining the significant impacts of administrative changes on enforcement actions. As this scenario unfolds, industry observers will closely monitor how regulatory approaches may realign with shifting political landscapes.
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