Comerica Bank & The Red Queen Effect: Avoid Running Faster to Stay in the Same Place

In Through the Looking Glass, Alice, a young girl, gets schooled by the Red Queen in an important life lesson that many of us fail to heed. Alice finds herself running faster and faster but staying in the same place.

"Alice never could quite make out, in thinking it over afterwards, how it was that they began: all she remembers is, that they were running hand in hand, and the Queen went so fast that it was all she could do to keep up with her: and still the Queen kept crying ‘Faster! Faster!’ but Alice felt she could not go faster, though she had not breath left to say so.

The most curious part of the thing was, that the trees and the other things round them never changed their places at all: however fast they went, they never seemed to pass anything. ‘I wonder if all the things move along with us?’ thought poor puzzled Alice. And the Queen seemed to guess her thoughts, for she cried, ‘Faster! Don’t try to talk!’

Eventually, the Queen stops running and props Alice up against a tree, telling her to rest.

Alice looked round her in great surprise. ‘Why, I do believe we’ve been under this tree the whole time! Everything’s just as it was!’

‘Of course it is,’ said the Queen, ‘what would you have it?’

‘Well, in our country,’ said Alice, still panting a little, ‘you’d generally get to somewhere else — if you ran very fast for a long time, as we’ve been doing.’

‘A slow sort of country!’ said the Queen. ‘Now, here, you see, it takes all the running you can do, to keep in the same place.

If you want to get somewhere else, you must run at least twice as fast as that!’

CFPB vs. Comerica Bank

On December 6, 2024, the Bureau filed a complaint against Comerica Bank. Comerica is a Texas banking association headquartered in Dallas, Texas, and is a subsidiary of Comerica Incorporated, one of the largest banking associations in the country.

Since 2008, Comerica has had an exclusive contract with the Department of the Treasury, Bureau of the Fiscal Service to deliver various government benefits to consumers through a prepaid “Direct Express” debit card.

The prepaid card is the sole method for unbanked consumers to receive certain government benefits, including Social Security benefits.

The Bureau alleges that Comerica engaged in unfair acts and practices in its management of Direct Express by:

(1) failing to provide consumers a reasonable way to obtain effective and timely assistance, impeding consumers’ access to their accounts and their ability to avail themselves of the protections of Regulation E, which is the Electronic Fund Transfer Act’s (EFTA), implementing regulation.

(2) forcing consumers to close their accounts and request new cards, causing them to incur additional fees instead of meeting its obligation to honor stop payment requests.

(3) failing to provide correct and complete information to enrollment-fraud victims regarding whether the fraud occurred and how to obtain remediation; and

(4) charging consumers ATM fees that they did not owe. The Bureau further alleges that Comerica repeatedly failed to comply with EFTA and numerous provisions of its implementing Regulation E in its treatment of Direct Express cardholders, including failing to timely investigate cardholder error claims, failing to report the results of its investigations to cardholders, and failing to provide cardholders with a written explanation of its findings.

The Bureau seeks permanent injunctive relief, redress for consumers, and a civil money penalty.

The CFPB's Press Release makes reference to the following specific failures:

Specifically, the CFPB alleges that Comerica harmed its customers by:

• Deliberately disconnecting customer service calls: Comerica’s vendors intentionally dropped more than 24 million calls from customers before they could reach a representative. Customers whose calls were not dropped were routinely forced to endure excessively long wait times—often in excess of several hours—to speak with a representative to get help with unauthorized transactions, charge disputes, and lost or stolen cards.
• Charging consumers illegal ATM fees: Over one million Direct Express cardholders were charged ATM fees to access their government benefits in situations where they were legally entitled to free withdrawals.
• Misleading fraud victims: When consumers contacted Comerica alleging, they had been fraudulently enrolled into the Direct Express program, the bank’s vendors frequently advised the consumers that “no error occurred” where the bank had determined that there was, in fact, enrollment fraud.
• Imposing illegal terms of service on consumers seeking to stop payments: Comerica led its consumers to agree to waive their consumer protections by requiring cardholders to contact and request merchants to stop pre-authorized payment transfers from their account in situations where the law in fact required the bank to stop the transfers itself.
• Failing to investigate account problems: Under federal law, when a customer notifies a bank about an incorrect or potentially fraudulent charge on their account, the bank must take steps to investigate the error within a specified time period. The CFPB’s investigation found that Comerica failed to meet this requirement more than 20,000 times. And when they did investigate, they frequently provided vague and confusing findings or blew off customers altogether.
• Forcing consumers to close accounts, which often resulted in additional fees: The bank’s vendors required thousands of cardholders to close their accounts to stop a preauthorized payment, resulting in consumers incurring additional fees to expedite receipt of their new debit cards to regain access to their government benefits.

PHOENIX Consulting Notes

I am certain that few, if any, would assert that Comerica deliberately and purposefully determined to harm any of its customers, much less its most vulnerable customers.

So, in the immortal words of my mentor Ray Hunt, "What happened, before what happened, happened?"

The CFPB's issues mostly begin with the statement, "Comerica’s vendors." This incident is, and I am certain of this, begins and ends with the C-Suite Leadership's over reliance upon third-party vendors to assist with increased customer service pressures, and the failures to build a cohesive management structure to oversee the activities of same.

The entirety of this situation is all too common within our industry. The fix is a relativity simple one, but the solution requires focus and a sincere commitment to embrace change.

Start by working Smarter, Not Harder

The Red Queen Effect means that staying in the same place is falling behind. Surviving another day means we have to co-evolve with the systems we interact with.

It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.

Species that are more responsive to change can gain a relative advantage over the ones they compete with and increase the odds of survival. In the short run, these small gains don’t make much of a difference, but as generations pass the advantages compound.

Everyone from Entrepreneurs and Fortune 500 CEOs to best-selling authors and middle managers are embedded with their own Red Queen. Rather than run harder, wouldn’t it be nice to run smarter?

In Deep Simplicity, please review the red queen principle with frogs

There are lots of ways in which the frogs, who want to eat flies, and the flies, who want to avoid being eaten, interact. Frogs might evolve longer tongues, for fly-catching purposes; flies might evolve faster flight, to escape. Flies might evolve an unpleasant taste, or even excrete poisons that damage the frogs, and so on. We’ll pick one possibility. If a frog has a particularly sticky tongue, it will find it easier to catch flies. But if flies have particularly slippery bodies, they will find it easier to escape, even if the tongue touches them. Imagine a stable situation in which a certain number of frogs live on a pond and eat a certain proportion of the flies around them each year.

Because of a mutation a frog develops an extra sticky tongue. It will do well, compared with other frogs, and genes for extra sticky tongues will spread through the frog population. At first, a larger proportion of flies gets eaten. But the ones who don’t get eaten will be the more slippery ones, so genes for extra slipperiness will spread through the fly population. After a while, there will be the same number of frogs on the pond as before, and the same proportion of flies will be eaten each year. It looks as if nothing has changed, but the frogs have got stickier tongues, and the flies have got more slippery bodies.

In my view, it is way past time for our C-Suite Leaders to develop extra sticky tongues!

The CFBB's Complaint can be found here:

cfpb_CFPB-v.-Comerica-Bank__Complaint_2024_12.pdf

The CFPB's Press Release can be found here:

CFPB Sues Comerica Bank for Systematically Failing Disabled and Older Americans | Consumer Financial Protection Bureau