The financial company overseeing the Direct Express prepaid debit card program, which distributes federal Social Security, disability, and veterans benefits, faces accusations of inadequately preventing fraud and failing to reimburse victims of fraudulent charges. Many sources indicate that the institution’s practices make it difficult for cardholders to recover lost funds. Even when individuals comply with the bank’s strict requirements, they often struggle to get refunds for compromised cards.
This has led some beneficiaries to take legal action against the company in an effort to reclaim even a small portion of the funds that were stolen from them, leaving others without any recourse at all.
A window for recovering some of these stolen funds recently closed. A class action settlement of $1.2 million was reached in July 2024 over mishandled refunds from February 2018 to September 2022. Those involved had to submit claims by a September deadline, receiving only a fraction of their actual losses.
Unless another lawsuit arises, individuals like JoAnn Chaney, a 76-year-old from Irmo, S.C., may find it impossible to recover funds fraudulently taken from their accounts.
Chaney discovered fraudulent charges on her card in August, which had been accumulating for over a year, totaling more than $1,100. She recognized that these purchases were not made by her. For instance, charges from Google were consistently occurring on the same day her Social Security benefits were deposited into her Direct Express card, suggesting someone was unlawfully using her funds to purchase games.
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On her first call with Direct Express on August 8, 2024, Chaney waited two hours on hold before speaking with a customer service representative, who acknowledged that the charges were not her doing. She was then directed to the fraud department—an experience Chaney describes as a “dead end.”
“That’s when the trouble started—when we were transferred to the fraud department,” she recounted. “They said they would send me a form to fill out, which had to be completed by August 23.”
Concerned about the timeline, Chaney’s daughter inquired about how long it would take to receive a refund and was told it could take “45 to 90 days.” When they requested that the form be emailed instead of mailed, that was also denied. Unfortunately, the required form never arrived, and when Chaney emailed detailing the fraudulent charges, her refund was denied as the form was not submitted by the deadline.
Reaching out to Comerica Bank, Chaney was advised to contact the Social Security Administration for assistance. At the local Social Security office, she noticed many others were there for the same issue: fraudulent charges on their Direct Express debit cards.
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THE SCOPE…
As of February 2024, around 4.5 million Americans were receiving about $3.3 billion monthly on Direct Express prepaid debit cards.
The confusion surrounding customer service and dispute resolution stems from the fact that multiple entities are involved in the program.
Direct Express has been backed by the U.S. Treasury for nearly 20 years, transitioning benefits from paper checks to electronic processing. The program has operated under Comerica, headquartered in Dallas, Texas, which issues cards on behalf of the government and oversees the debit card program, including aspects of fraud prevention and dispute resolution. Other companies like Conduent handle various administrative functions, including running the call center and processing claims.
With so many parties involved, cardholders like Chaney often find themselves passed between different departments without receiving the help they need. Reports from cardholders and Social Security Administration employees indicate a lack of clarity about who is responsible for these claims, leading to frustration.
However, changes may be coming to the program. Comerica announced this summer that the Treasury informed them that a new financial institution would take over the contract in 2025. As reported, Bank of New York is set to be the new vendor.
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In the interim, beneficiaries like Chaney are left to attempt recovery of their losses. While many are hesitant to raise their voices, Chaney is not.
“I’m not afraid to come forward because I’ve worked for 54 years,” Chaney stated. “I’m a retired nurse. That money is mine; I worked for it. It’s not an entitlement. I want it back. If it takes me three years, I want it. There are others going through the very same thing.”
Chaney shared her experience with her friend, Irmo town council member Phyllis Coleman.
“How can the government ignore this and not resolve it quickly?” Coleman expressed.
Together, Chaney and Coleman reached out to the media.
The Better Business Bureau has been inundated with complaints about Direct Express, highlighting the long wait times that aggravate frustrations over unresolved issues. To help others navigate these challenges, Kwame Kuadey from Social Security Edge created a helpful YouTube video with tips.
Here are some suggestions he offered:
- Call early in the morning or late at night, but expect long wait times any time you call.
- Write a letter to Direct Express and send it by certified mail.
- Reach out to your U.S. Congress member.
- Submit a complaint or review through the Better Business Bureau.
- Use social media to draw attention, as the Treasury Department and Comerica Bank are active there.
- Contact a reporter for assistance.
The issues with Direct Express are not new, nor are they unknown to authorities. The Office of Inspector General (OIG) released an audit of cardholder disputes in September 2024 after receiving numerous complaints. The audit reviewed the fraud dispute process but did not touch on final decisions.
In past years, OIG criticized the company for poor compliance with government contract standards relating to fraud prevention and claims management.
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With no guarantees of troubleshooting the issues with fraud on Direct Express cards before the new contract takes effect, beneficiaries remain vulnerable. Chaney has taken to withdrawing her funds as soon as payments are made to avoid more fraudulent charges.
Inquiries made to the U.S. Treasury Department and Social Security Administration in search of cardholder advice resulted in little clarity. A spokesperson mentioned ongoing efforts to combat fraud, noting that the program’s fraud rate was reportedly lower than comparable programs. However, cardholders who shared their experiences expressed no significant improvements or protection measures.
The Treasury’s reply did not provide answers that the concerned parties were hoping for, as many reported their issues without seeing resolution. Time will tell how much more money may be lost before changes take effect in 2025.
