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For the first time since it was launched by the U.S.Treasury nearly two decades ago, Direct Express – a prepaid debit card system for federal beneficiaries – is operating under the auspices of a new financial agent. Will the 4.5 million people who rely on this program will see improved customer service and dispute resolution related to fraudulent charges?
That remains to be seen…
Direct Express was created in 2008 to distribute Social Security, disability, and veterans’ benefits electronically, eliminating the need for paper checks. Since its inception, Comerica Bank had been the financial agent responsible for administering the program. However, a history of alleged mismanagement and unresolved customer issues – particularly related to fraud prevention and dispute resolution – ultimately led to the Treasury seeking a new partner.
As of January 3, 2025, Bank of New York is the new provider for the program – although the migration of accounts remains in the planning phase, leaving many beneficiaries in a holding pattern.
Over the years, Direct Express cardholders have voiced widespread concerns about Comerica’s management of the program. Many have reported significant financial losses due to unauthorized transactions. Affected individuals often found the process of disputing these charges to be unnecessarily complex – with few achieving successful resolutions.
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RELATED | DIRECT EXPRESS FRAUD FAILURE PLAGUES BENEFICIARIES
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One cardholder told FITSNews that after losing $1,000 to fraudulent charges, the recovery process they were told to pursue was “a nightmare” – leaving them financially vulnerable and without recourse. These issues and others were documented in multiple Office of Inspector General (OIG) reports published in 2014, 2017, 2019, and 2020 – all highlighting Comerica’s failure to meet fraud prevention standards and provide proper oversight of vendors, including one operating out of Pakistan which handled sensitive information.
The new five-year contract with the Bank of New York Mellon is expected to address the systemic issues that plagued the program. However, Treasury officials have emphasized that the transition will be phased to minimize disruptions for those who rely on Direct Express cards.
“In order to ensure excellent customer support and reduce impact to benefit recipients, the transition will be staged,” a spokesperson for the Bureau of Fiscal Services stated.
While some features may be rolled out before the migration begins, the timeline remains uncertain. Communication with cardholders regarding the transition is not expected to start before spring 2025.
For now, Comerica will continue to service existing accounts until beneficiaries are migrated to the new system. Cardholders experiencing fraud are urged to report incidents through existing customer service channels listed on the Direct Express website. Cardholders can also report fraud with Social Security benefits to the Office of Inspector General at 1-800-269-0271.
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ABOUT THE AUTHOR …
Callie Lyons is a journalist, researcher and author. Her 2007 book ‘Stain-Resistant, Nonstick, Waterproof and Lethal’ was the first to cover forever chemicals and their impact on communities – a story later told in the movie ‘Dark Waters.’ Her investigative work has been featured in media outlets, publications, and documentaries all over the world. Lyons also appears in ‘Citizen Sleuth’ – a 2023 documentary exploring the genre of true crime.
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