The Federal Reserve has fined Green Dot $44 million for "numerous" unfair and deceptive practices in the marketing, selling and servicing of its prepaid cards and its tax return preparation payment services.
Green Dot broke consumer law, says the Fed, adding that in addition to the unfair and deceptive practices, the company had a deficient consumer compliance risk management programme.
For example, Green Dot 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 to the fine, Green Dot must hire an independent third-party to strengthen its consumer compliance risk management programme; develop an effective AML programme; and hire an independent third-party to conduct a review of certain transaction activities.
Shares in Green Dot were down more than five per cent in afternoon trading on Friday.
Green Dot works with big names, including Apple and Walmart, on their debit cards and in 2021 launched its own mobile bank.
However, it ran into trouble in 2022, firing CEO Dan Henry after three partners told it that they would not be renewing contracts and it became embroiled in a dispute with Uber.