\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/07\/GettyImages-2158705289.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Green Dot Bank, the tiny state-charted Utah bank behind financial products at some of America\u2019s largest companies\u2014including Apple<\/a> and Walmart\u2014today agreed to pay a $44 million fine previously disclosed by the Federal Reserve. Green\u2019s stock fell 5.7% today to $9.26, and is now 85% off the all-time-high of $63.44 it hit October 2020. The fine does not place any restrictions on the bank\u2019s ability to serve its existing clients.<\/p>\n In a statement published this afternoon the Fed said the fine was for \u201cnumerous unfair and deceptive practices and a deficient consumer compliance risk management program.\u201d According to the statement, Green Dot violated consumer law in its marketing, selling, and servicing of prepaid debit card products, and its offering of tax return preparation payment services.<\/p>\n Specifically, Green Dot failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third party\u2019s website. Green Dot previously announced it had set aside $20 million to help cover the fine. Green Dot CEO George Gresham said in a statement the bank had been working closely with regulators to prepare for the public enforcement action.<\/p>\n \u201cThe order relates to practices in place years ago, and we have taken and will continue taking meaningful steps to correct and remediate those issues,\u201d Gresham said in the statement. \u201cIncluding significant updates to our processes, our product packaging and marketing.\u201d<\/p>\n Fortune<\/em> previously reported on Green Dot\u2019s work with Apple<\/a> and Walmart<\/a>. The bank is part of a recent trend called banking-as-a-service, where chartered banks work with tech companies to help them build services only banks can offer.<\/p>\n Financial analyst Timothy Switzer of financial services broker-dealer Keefe, Bruyette & Woods wrote in an investor note that, while the fine is more than the bank initially set aside, it is below the maximum potential loss of $50 million estimated by the bank\u2019s management. KBF estimates the additional $24 million will reduce earnings per share by between $0.35 and $0.44, depending on tax deductibility, representing a 23% to 30% decline relative to its current estimate.<\/p>\n \u201cImportantly,\u201d Switzer wrote, \u201cthe order did not place any restrictions on GDOT\u2019s business operations, as management expected, indicating that the direct financial impact will be limited to investment requirements.\u201d<\/p>\n In addition to the fine, the Federal Reserve Board is requiring that Green Dot hire an independent third-party to strengthen its consumer compliance risk management program, develop an effective anti-money laundering program, and hire an independent third-party to conduct a review of certain transaction activities.<\/p>\n The company\u2019s second quarter earnings results are expected to be published on August 8, and should provide further information.<\/p>\n<\/div>\n\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n<\/div>\n