January 10, 2019

Warren Investigation Uncovers New Evidence That Financial Contractor Comerica Left Retirees, Veterans Vulnerable to Fraud

Contractor for Social Security and VA benefits failed to appropriately disclose fraud; Letter asks Treasury to Address Weaknesses in New Contract

Text of the Letter (PDF)

Washington, DC ­- United States Senator Elizabeth Warren (D-Mass.) sent a letter to Treasury Secretary Steven Mnuchin and Bureau of the Fiscal Service Commissioner Kimberly McCoy sharing the results of an investigation of fraud affecting Social Security and VA beneficiaries using the Comerica-administered Direct Express program. The letter comes as the Treasury Department seeks applications to re-bid the agreement Comerica Bank currently holds as the Direct Express program operator.

Since 2008, Comerica has administered the Direct Express program, which serves 4.5 million Americans. The Direct Express program was designed to assist elderly and disabled Americans and veterans by providing prepaid debit cards and electronic payments of federal Social Security disability and veterans benefits.  Federal benefits are the primary source of income for many of these Americans to keep a roof over their heads, pay for life-saving medications, and put food on the table. 

Senator Warren opened the investigation after a constituent in Massachusetts contacted her office to report that Comerica left the account of her family member vulnerable to fraud and failed to reimburse him for stolen benefits in a timely manner. The Direct Express program was plagued by similar incidents of criminals impersonating beneficiaries and draining their accounts. Victims were not notified of the fraud by Comerica and in some cases spent months trying to get these critical benefits restored. This left many of the most vulnerable Americans without a critical source of income.

Today, she released the results of the investigation and sent them to Secretary Mnuchin, asking for improvements in the program to prevent fraud.

Senator Warren wrote, "I ask that you address the problems revealed by my investigation and make sure the benefits received by elderly and disabled Americans and those who served our country are not vulnerable to fraud."

Senator Warren's investigation revealed that:

  • Hundreds of individuals were affected by fraud in the Direct Express program. According to information provided by Comerica, in the one year after the feature was introduced to all Direct Express cardholders in August 2017, there were 480 cases of fraud. The total amount of confirmed fraud is almost $460,000, an average of nearly $1,000 stolen per affected individual.
  • Social Security Administration, VA officials, and the public were not informed of fraud affecting their program beneficiaries by Comerica. In fact, officials at the Social Security Administration and the VA learned of the fraud only after public reports brought it to their attention.
  • Comerica had insufficient procedures to prevent criminals from impersonating beneficiaries and stealing their benefits. Comerica was not the victim of a cybersecurity breach. Instead, criminals were able to obtain personally identifiable information about beneficiaries from other sources and use that to commit fraud through Comerica's Cardless Benefit Access program. Comerica's antifraud system was not robust enough to prevent this fraud.

Senator Warren opened this investigation in October, when she sent letters to Comerica, the Social Security Administration (SSA), and the Department of Veterans Affairs to seek answers about security problems in Comerica's Direct Express debit card program which led to hundreds of Americans becoming victims of fraud when their Social Security, disability, or other federal benefit payments were stolen.