Serve Card Lawsuit Claims American Express Failed to Investigate Stolen Tax Refunds

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A New Jersey consumer alleges in a lawsuit that American Express Travel Related Services Company violated federal law by failing to conduct a timely investigation after being notified that the Serve card containing the woman’s federal and state tax refunds was used fraudulently. 

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The 24-page proposed class action lawsuit accuses AmEx of violating the federal Electronic Funds Transfer Act (EFTA), which entitles consumers nationwide to challenge financial card errors and “have them corrected within a certain time frame” with limited financial consequences. Per the case, the defendant failed to conduct any investigation of the plaintiff’s report that her Serve card containing her 2022 tax refund of more than $3,000 was used fraudulently in Brooklyn, New York. 

In particular, the suit says AmEx failed to “meaningfully consider” the plaintiff’s transaction histories for a reasonable period of time immediately preceding her fraud alert to determine “whether the unauthorized transactions were consistent with their prior transaction history.” Further, AmEx ran afoul of the EFTA when it refused to completely reverse or refund the stolen money to the plaintiff and proposed class members who have had similar experiences with Serve cards, the filing alleges. 

According to the complaint, non-party Serve enables consumers to open American Express Jackson Hewitt prepaid debit accounts into which accountholders can deposit tax refunds and other funds. Jackson Hewitt, after completing customers’ taxes, will provide certain individuals with a Serve American Express Jackson Hewitt prepaid debit card that functions similarly to a basic bank debit card tied to a traditional checking account, the filing says. 

The plaintiff claims that upon Jackson Hewitt completing her taxes in 2022, the preparer issued her a Serve prepaid debit card that purportedly contained $3,002.05. However, the plaintiff attempted to use the card in February 2023 and found that the account contained zero dollars, allegedly because an unknown person withdrew roughly $2,930 “in a series of ten small ATM transactions” at a CVS in Brooklyn, the lawsuit says.

Per the complaint, the plaintiff has never traveled to Brooklyn for a banking transaction, never lost her card, and never wrote down or shared the card’s PIN, and the woman says she immediately reported the theft to Serve, submitting a declaration of fraud detailing what transpired. 

In March 2023, the suit says, Serve rejected the plaintiff’s fraud claim, apparently because its investigation determined that no error had occurred and that the transactions in question were authorized. That same month, the plaintiff filed a police report, yet to date the woman has not received any reimbursement or compensation for the stolen Serve card funds, the lawsuit states.

The filing contests that American Express Travel Related Services Company has been “accused of these same tactics by consumers throughout the country.” 

Under the EFTA, a financial institution such as American Express, among other requirements, must conduct an investigation within 60 days of a report of fraud and, from there, determine whether an error has occurred and report or mail the results of its investigation to the consumer within 10 business days, the complaint relays. 

The lawsuit looks to cover anyone in the United States whose Serve bank account was debited for one or more transactions without the consumer’s written preauthorization within the last year. 

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