CFPB drops lawsuit against Comerica Bank, without prejudice

Bloomberg News

The Consumer Financial Protection Bureau on Friday dropped a lawsuit against Comerica Bank, the latest of many enforcement actions taken by former CFPB Director Rohit Chopra in the last month of the Biden administration to be dropped under the Trump administration.

The suit against $79.3 billion-asset Comerica, based in Dallas, was dropped without prejudice, which allows the agency to refile the same case again if it chooses to do so. Many of the remaining cases from the Biden administration have been dismissed "with prejudice," which bars the agency from bringing the case back to court. 

The CFPB filed a one-sentence notice of dismissal with the U.S. District Court for the Northern District of Texas, saying that it "dismisses this action without prejudice against [the defendant], Comerica Bank." Comerica did not immediately respond to a request for comment.

The CFPB action likely was prompted by a Texas judge, who last month denied the bureau's effort to pause the litigation against Comerica, stating that the bureau had failed to explain how a stay "would be in the interest of justice."

In December, the CFPB accused Comerica of deliberately disconnecting 24 million customer service calls, claiming that the bank engaged in "unfair acts and practices" in its management of Direct Express, a Treasury Department program that delivers government benefits on prepaid debit cards. Direct Express is one of the few ways for citizens without a bank account to receive government benefits including disability and Social Security.

In the lawsuit, the CFPB had sought permanent injunctive relief, redress for consumers and a civil money penalty. The bureau did not explain to the public why it dropped the suit or how harmed consumers can obtain restitution.

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The CFPB's allegations in the now-dropped suit against Comerica related to how the bank had failed to provide consumers with a reasonable way to get timely assistance with fraud disputes. The suit further alleged that the bank had actually impeded access to their Direct Express accounts and to consumer protections outlined by Regulation E, which implements the Electronic Fund Transfer Act. The bureau alleged that Comerica was "forcing consumers to close their accounts and request new cards, causing them to incur additional fees instead of meeting its obligation to honor stop payment requests."

The Dallas-based bank also failed to provide correct and complete information to consumers who alleged they were fraud victims and how they could obtain remediation. The bank charged consumers ATM fees that they did not owe, the CFPB claimed.

The CFPB also alleged that Comerica "repeatedly failed to comply with EFTA and numerous provisions of its implementing Regulation E in its treatment of Direct Express cardholders, including failing to timely investigate cardholder error claims, failing to report the results of its investigations to cardholders, and failing to provide cardholders with a written explanation of its findings," according to the lawsuit. 

In 2023, American Banker published an article, based on internal bank documents, in which Comerica officials privately acknowledged significant compliance failures in their operation of the Direct Express program. In the documents, a Comerica executive admitted that the Dallas bank had engaged in a "serious contract violation" for allowing fraud disputes and data on Direct Express cardholders to be handled out of a third-party vendor's office in Lahore, Pakistan. 

In November, the Treasury Department named Bank of New York Mellon to take over the Direct Express contract from Comerica, a decision that was expected.