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newsWatchdog


BOTCHED BID RUN BY FEDS PUTS COMERICA BANK IN HOT SEAT FOR PROBLEMS WITH BENEFIT
CARDS 


DALLAS-BASED COMERICA BANK IS UNDER FIRE FOR NOT SUPERVISING ITS FEDERAL
BENEFITS PROGRAM PROPERLY.

By Dave Lieber





Mar. 15, 2018
|
Updated 3:12 p.m. GMT-5
|
1 min. read
(Rose Baca / Staff Photographer)



The poor, disabled, elderly and veterans are the ones we're supposed to protect.
In this story, they are the ones hurt — by a bank, by federal regulators and by
call center employees who sometimes hang up on them.

For this telling, I want to reverse engineer this travesty back to its origin.

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Millions of Americans collect their federal benefits through a prepaid debit
card called Direct Express. The cards are issued by Dallas-based Comerica Bank,
headquartered in Comerica Bank Tower on Main Street.

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If you have to speak to someone at Direct Express, you'll talk to an outsourced
employee in one of six call centers run by Conduent, a New Jersey company that
once was part of Xerox.

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The problem is that when a debit card's numbers are stolen — and everyone knows
how often that happens — the intended recipient's money is tied up, sometimes
forever. Customers complain that it's tough getting through to someone at the
call center who will help. And finding someone at Direct Express who will call
you back? An impossibility.

Meanwhile, the poor, elderly, disabled and veterans are missing mortgage
payments and more, through no fault of their own.

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Three months ago, The Watchdog told the story of a woman suffering from dementia
whose card was lost. No one would help her. The Watchdog intervened, and the
woman was sent $28,000 in back Social Security payments.

After that, I began hearing from other Direct Express card users who complain of
similar lost-money scenarios.

Call centers operated by Conduent appear to be poorly run, complaints to The
Watchdog indicate.

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J.B. Simms says: "My debit account was hacked twice in a 12-month period. ...
Direct Express/Comerica did nothing. My many calls are being ignored."

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The Better Business Bureau reports 480 complaints against Comerica in the last
three years. The U.S. Consumer Financial Protection Bureau reports 128 in its
database.

The Comerica Bank location along Central Expressway and Spring Valley Road in
Richardson.(Andy Jacobsohn / Staff Photographer)


GO BACK A STEP

So how did Comerica win the contract? Tracing it back, I see the bank won
a renewal of the contract, due to expire in 2020, under the most questionable
circumstances.

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Comerica, which held the contract since the program began in 2008, was not
supposed to get an extension. The contract was put to bid, in part, because of
Comerica's failures in stopping card thefts and hurting customers.

A close study of the bid selection process by the U.S. Treasury Department's
Office of Inspector General showed the 2014 bid was, on my reading of a 2017
audit, improperly awarded.

How so? Back in 2014, when the contract was rebid, Comerica was one of two
finalists. The other bank in the OIG report was referred to as "Bank A." The
only clue given: Bank A is bigger than Comerica with a greater national
reputation.

Bank A's bid was essentially free to taxpayers. Zero. The perfect number.

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Comerica's bid came in at a much steeper price to taxpayers (not card users) —
$5 for each new enrollment and a monthly fee of 30 cents per account. Faced with
competition, Comerica dropped its bid to $2 per account and 15 cents a month.
Still a lot more than zero.

U.S. Treasury officials who picked a winner were afraid to switch banks. They
feared chaos in the transition and missed benefits. It didn't matter to Treasury
that choosing Comerica would cost taxpayers at least $35 million compared to
nothing for Bank A.

Even though Comerica was running a program riddled with complaints, the bank was
still the favorite. Transitioning to Bank A would cost around $48 million and
bring large savings — $254 million. Yet Comerica was still the favorite.


TRACING BACK

Finding someone who can do a better job than Comerica is a worthy goal. Treasury
officials showed excessive favoritism to Comerica. For one thing, before the
2014 rebid, Comerica was given $32 million in taxpayer money to run the program.
But that was never part of the original contract.

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That raised suspicions. A 2014 audit shows that the feds turned Comerica's
potential $24 million loss into an $8 million profit for the bank. Must be nice.

That news led to a new request for bids in 2014.

Before that, according to a report by the Center for Public Integrity, Social
Security and other benefits of thousands of Direct Express users were illegally
rerouted to criminals' accounts due to weak fraud controls at Comerica.

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And that's how the troubles began.


WHAT THEY SAY

This week, Sean Collins, senior communications director for Conduent, the call
center company, told me: "Please contact Comerica Bank for any questions
pertaining to the Direct Express program."

Comerica spokeswoman Yolanda Walker told The Watchdog that the bank responded to
301 complaints to federal regulators last year about Direct Express.

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She said fraud victims in the program are "isolated incidences."

"Comerica is extremely proud of the customer service we provide to Direct
Express cardholders," she said, citing a 94 percent customer satisfaction score.

U.S. Treasury spokesman Thomas E. Santaniello cited that same score. He said
last year's OIG report found that federal regulators "followed applicable laws,
regulations, policies and procedures when selecting Comerica as the Direct
Express financial agent."

Maybe if unidentified Bank A and its no-cost offer had been accepted, the poor,
disabled, elderly and veterans wouldn't deal with call center employees who
sometimes don't care, won't help and hang up.

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If this happens to you, the Comerica complaint line is 313-222-3435. If you want
to play hardball, complain to the U.S. Treasury at 1-800-359-3898 or email
hotline@oig.treas.gov.

Note: Want to become an official citizen of my consumer protection movement,
Watchdog Nation? Learn how to protect yourself in the modern world. I'll be
giving the keynote address at 12:15 p.m. March 21 at Arlington's Aging Well Expo
at the Arlington Convention Center.

The free event goes from 9 a.m. to 2 p.m. The public is invited. Learn more
at www.arlington-tx.gov/agingwell/.

Staff writer Marina Trahan Martinez contributed to this report.

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Updated at 12:58 a.m, March 16, 2018: Revised to clarify the Conduent
spokesman's decision not to participate in this column.


WHAT IS DIRECT EXPRESS?

Direct Express serves beneficiaries from 21 programs offered by Social Security,
Veterans Affairs, Department of Labor, Office of Personnel Management, Railroad
Retirement Board, Department of Homeland Security and Department of Defense.

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Most beneficiaries use direct deposit to their bank or Direct Express cards to
get their payments.

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DID YOU LEARN SOMETHING VALUABLE? SHARE THIS STORY ON FACEBOOK TO HELP YOUR
FRIENDS.

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READ MORE STORIES FROM THE WATCHDOG

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You can't afford to miss The Watchdog. Follow our latest reporting always at The
Watchdog page.

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Watchdog Dave Lieber of The Dallas Morning News is leader of Watchdog Nation,
which shows Americans how to stand up for themselves and become super consumers.

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By Dave Lieber

DAVE LIEBER is “The Watchdog” investigative columnist for The Dallas Morning
News who fights for his readers and exposes bad practices in business and
government. A judge in a national columnists contest called his winning entries
"models of suspenseful storytelling and public service."

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