(Bloomberg) -- The Federal Reserve fined Green Dot Corp. $44 million over the firm’s handling of prepaid debit cards and tax preparation payment services. The stock fell as much as 6.1%.
Green Dot broke consumer laws with its marketing, selling and servicing of prepaid debit card products, as well as with its offering of tax return preparation payment services, the central bank said in a statement Friday.
In some cases from November 2017 through January 2021, Green Dot allegedly told consumers that their prepaid debit card accounts would be closed after they spent their balances down to zero. Instead Green Dot kept them open and continued to charge monthly fees, according to a cease and desist order.
The Fed also cited ineffective consumer compliance risk management and anti-money laundering programs. Green Dot was told to hire independent experts to bolster its procedures.
The Fed said Green Dot settled the matter without admitting or denying the allegations. In an emailed response, Green Dot noted the order concerns events from years ago.
“We are committed to cooperating and partnering closely with our regulators to ensure all concerns noted in the consent order are addressed and complied with and that our customers are well-served and protected on an ongoing basis,” Green Dot said. “We remain optimistic about our financial and regulatory positions.”
Green Dot works with retail outlets including Apple, Walmart, Amazon, and CVS Pharmacy to provide customer financial services, according to its website. The stock, which traded for more than $90 a share in 2018 amid enthusiasm for financial technology companies, now hovers under $10.
(Updates with Fed’s specific concerns starting in second paragraph)
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