NEWS BRIEF: Utah's Green Dot Bank is Fined $44.0 Million by the U.S. Federal Reserve Board

Citing "... unfair and deceptive acts and practices in violation of Section 5(a)(1) of the FTC Act..." and "... a faulty consumer compliance risk management program ..." (from 2017 through 2022), the Federal Reserve also issued what appears to be a comprehensive Consent Order against Green Dot Bank and its Austin, Texas-based holding company, Green Dot.

Provo, Utah-based Green Dot Bank and its holding company, Texas-based Green Dot, have been fined $44.0 million by the Federal Reserve Board for what it terms as "... numerous unfair and deceptive practices and a deficient consumer compliance risk management program."

According to a news release published by the FRB, and the attendant Cease and Desist Order (published separately), the Fed found that Green Dot had violated "... certain consumer compliance deficiencies resulting in unfair or deceptive acts or practices in or affecting commerce ...," as well as operating with "... unsafe or unsound practices."

These included

• Assessment of Fees on Zero Balance Accounts;
• Not allowing consumers to Register Prepaid Debit Card Accounts by phone, in spite of Green Dot's advertising and marketing claims to the contrary;
• Blocking Access to Prepaid Card Accounts Without Reasonable Policies and Procedures;
• Implementing Extended Authorization Holds on prepaid debit cards; and
• Failing to clearly and conspicuously disclose Tax Return Preparation Payment Services Fees.

Under terms of the agreement, Green Dot was assessed "... a civil money penalty" of $44.0 million by the FRB.

Additionally, Green Dot agreed to enact, and or strengthen, its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance efforts, including, but not limited to, activities and programs ranging from

• Revising its BSA/AML compliance plans to
• Enhancing its policies and procedures for its Customer Identification Program to ensure "... it knows the true identity of its customers."

It should be noted that Green Dot entered into the Consent Decree referenced in this report prior to going to court and "... without admitting or denying any allegation made or implied ..." in this matter.

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