Letitia James Gets Nearly $2 Million in 9 Days

The office of New York Attorney General Letitia James had a strong week and a half, bringing in almost $2 million after consecutive legal victories.

James' office announced on Wednesday that Pathward, a nationally chartered bank formerly known as MetaBank, illegally sent debt collectors tens of thousands of dollars from New Yorkers' accounts and froze hundreds of other customers' accounts more than 1,400 times. They are now being made to pay almost $80,000 to New York residents in the Bronx, Manhattan, Brooklyn, and Queens, in addition to $627,000 in penalties.

It comes on the heels of James securing a $1.25 million judgment on April 9 from conservative activists Jacob Wohl and Jack Burkman stemming from a lawsuit filed by James' office claiming that Wohl and Burkman worked to suppress Black voters ahead of the 2020 election.

"Vulnerable New Yorkers had money taken out of their bank accounts by the very institution they trusted to protect them," James said Wednesday in a statement. "Pathward's illegal actions deprived New Yorkers of their hard-earned wages and critical government benefits. My office is refunding New Yorkers for every dollar they lost due to Pathward's illegal actions."

Pathward, based in Sioux Falls, South Dakota, issues debit cards, prepaid cards, payroll cards and gift cards primarily through third-party servicers.

"Nothing is more important to Pathward than maintaining a robust risk and compliance foundation and ensuring that we afford our customers every protection the law provides," a Pathward spokesperson told Newsweek on Thursday. "From the moment Pathward received notification of the investigation by the New York Attorney General's Office, we cooperated in every manner.

"The investigation revealed certain inadequacies in applying a New York-specific statute, and we are updating our procedures and are confident that similar issues will not occur going forward. We empathize with customers adversely affected and will work hard to regain their trust."

The company's illegal activity occurred between 2016 and 2022, according to the office's investigation, when accounts were frozen and violated the state's Exempt Income Protection Act (EIPA).

Signed into law on September 25, 2008, and effective on January 1, 2009, the EIPA ensures that New York residents can have reliable access to the money required to pay for basic needs, including housing, food, and medicine.

The main beneficiaries are those who receive social security and other state and federal subsistence payments, such as the elderly, disabled individuals, veterans, and low-income workers.

Consumer accounts tied to such federal assistance and worth up to $3,425 cannot be frozen by banks under the EIPA. It also doesn't allow banks to freeze accounts with protected wages, translating to $3,840 for residents of New York City, Long Island and Westchester, and $3,600 for all other New Yorkers.

According to the investigation, one incident in April 2021 involved a third-party servicer freezing a Pathward bank account with a balance of less than $800, several thousand dollars below the EIPA wage threshold. The consumer's account was unable to be accessed for a full year.

James previously was successful in a civil fraud lawsuit against Donald Trump and The Trump Organization, fining them $454 million for illegally inflating the value of assets to get a better deal on bank loans.

In February, Judge Arthur Engoron ordered the defendants to pay $354 million in damages, which, with interest, would total $464 million.

Update 04/18/24, 2:27 p.m. ET: This article was updated with comment from Pathward.