Class Action Lawsuit Alleges Comerica Bank Illegally Pockets Direct Express Participants’ Interest, Investment Income

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A proposed class action lawsuit alleges Comerica Bank has wrongfully retained millions in interest and investment income meant for Direct Express Program participants.

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The 29-page complaint explains that in 2008, Comerica entered into a contract with the Department of the Treasury’s Bureau of the Fiscal Service to serve as the exclusive administrator for Direct Express, a federal program that allows federal benefits recipients to receive their funds on a prepaid debit card.

Since 2008, the defendant has earned an estimated $100 million each year in interest and other investment income on federal benefits deposited by the government and held at Comerica Bank for Direct Express-enrolled beneficiaries, the complaint claims. However, rather than distribute earnings that rightfully belong to participants, Comerica has kept these funds for itself, the suit contends.

The case asserts that under Michigan law, which governs the relationship between Comerica and Direct Express program participants, any interest or investment income generated from the principal balance of funds held at a bank belongs to the owner of those funds. Comerica’s terms of use also unequivocally state that Direct Express beneficiaries are the owners of the funds in their accounts, the filing notes.

“By retaining the interest and other investment earnings generated from Beneficiaries’ federal benefits funds, all of which rightfully belong to the Beneficiaries, Comerica breached its contract with (and fiduciary duty owed to) Plaintiffs and members of the putative Class, converted their property, and unjustly enriched itself, all in violation of Michigan common law,” the complaint alleges.

According to the Comerica lawsuit, the defendant has maximized its corporate profits at the expense of some of society’s most vulnerable members. Direct Express Debit Mastercard holders include, but aren’t limited to, older adults receiving Social Security benefits, individuals with disabilities receiving Social Security disability insurance payments, coal workers eligible for compensation related to black lung disease, and veterans receiving veterans’ benefits, among others, the suit says.

The lawsuit looks to represent all United States residents who, within the past six years, received federal benefits funds from the government that were held by Comerica pursuant to the Direct Express program.

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