Green Dot in Austin, Texas, was fined $44 million by the Federal Reserve to address consumer compliance breakdowns tied to its prepaid debit card products.
The fintech, which acquired a bank in 2011, was accused of unfair and deceptive practices and a deficient consumer compliance risk management program.
The Fed said that Green Dot violated consumer law with its marketing, selling and servicing of prepaid debit card products. The company was also cited for how it offered tax return preparation payment services.
“Green Dot failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third party’s website,” the Fed said in a press release. The company blocked access to accounts of legitimate customers receiving unemployment benefits and “lacked reasonable policies and procedures to help those customers cure those blocks.”
The cease-and-desist order requires Green Dot to hire an independent third-party to strengthen its consumer compliance risk management program and address the causes of consumer complaints. It must develop an effective anti-money laundering program and hire an independent third-party to conduct a review of certain transaction activities.
Green Dot warned about the consent order in February, setting aside $20 million at the time and warning that the issue could end up costing up to $50 million.