Middle Tennessean can’t touch hefty tax refund after Green Dot bank blocks her account

NASHVILLE, Tenn. (WSMV) - Earlier this year, following a long-back tax battle with the IRS, Torrie Jackson said she and her husband got a hefty refund topping $68,000.

“That was exciting for us,” Jackson said. “We hadn’t got a refund in a while.”

The couple’s excitement didn’t last long because their accountant directed the IRS to deposit the money in a Green Dot Bank account, something Jackson was largely unfamiliar with at the time.

“We were gone when she filed the return and didn’t have my bank information,” Jackson said. “So Green Dot sent me a card through the mail.”

Jackson said issues popped up right away when the card didn’t work, and she had to have it replaced multiple times.

In July, the inconvenience became a nightmare she said when she started to make some large withdrawals in anticipation of closing the account, and Green Dot blocked her access to the remaining balance of more than $48,000.

“You freak out because you need those funds to take care of your business,” Jackson said. “Our kids had some things, so we were going to help them pay off some bills.”

Jackson said she immediately called Green Dot’s customer service number and was told the block was due to unusual activity on her account, something she didn’t understand.

“All I did was withdraw my money, and they could not explain to me what the unusual activity was,” Jackson said.

Jackson said Green Dot informed her she needed to verify her identity to gain access to her account, so she emailed the bank a copy of her driver’s license, a utility bill and a copy of her IRS refund letter, even though Green Dot didn’t ask for that, hoping it would clear up any issues.

It didn’t work because Jackson claimed Green Dot would not accept her documents, and two months later all her money remained frozen.

“I call them every day and they have the same answer,” Jackson said. “It’s devastating. I really don’t know what to do at this point.”

Green Dot is an online bank, sometimes referred to as a financial technology or fintech company, that specializes in prepaid credit cards and digital accounts used primarily for direct deposits and paying bills.

“It tends to be kind of a substitute, I would say, for traditional banking services,” said Ted Rossman, senior industry analyst at Bankrate. “The ability to get a tax refund more quickly is something they advertise.”

But recently, as NBC News reported other people have had issues accessing tax return funds too, but Green Dot said those troubles were related to platform service interruptions that have been corrected.

Rossman said Jackson’s account probably got flagged because the refunds Green Dot typically handles are far smaller than hers.

“This is really better suited for maybe a few hundred dollars, or maybe a couple thousand dollars,” Rossman said. “They don’t seem nearly accustomed to dealing with big sums.”

When Jackson made a series of large withdrawals in mid-July, Rossman thinks that probably set off alarm bells inside Green Dot’s fraud department, triggering the account block.

“Sometimes the institution will act to limit withdrawals, because it’s hard to get the horse back in the barn, basically, once it’s out so to speak.”

WSMV4 Investigates tried contacting Green Dot to set up and interview and ask questions about the issues like Jacksons, and whether the banks suspects fraud in her case.

Green Dot declined to answer any of our questions, saying in an email:

“For privacy and security reasons, we’re unable to share specific information related to customer cases or circumstances, particularly those believed to be fraud related. Also, as a general rule, we don’t disclose our processes for identifying, mitigating and preventing fraud, which is unfortunately increasingly prevalent across our industry.

We have communicated our concerns regarding the funds to the customer and have provided guidance on who to contact, including the IRS, for information and updates on the status of the funds.

It is our understanding the IRS is processing this case and more information should be available for the customer soon.”

Jackson said Green Dot’s statement about the IRS isn’t true.

“I’ve called the IRS. The IRS said they have no idea what they’re talking about,” Jackson said. “I was told once the IRS issues a tax refund, their hands are out of it.”

With Jackson getting nowhere, Rossman said her final recourse may be complaints with the Consumer Financial Protection Bureau and the Tennessee Department of Financial Institutions.

“You know as they say, the squeaky wheel gets the grease,” Rossman said. “The crying baby gets the milk.”

“Hindsight is 20/20, right? So, it would have been better perhaps to use a different bank,” Rossman said. “But still, this is her money, and she should be able to get it back.”

Jackson said she doesn’t plan to stop fighting for her money and hopes her story serves as a warning to anyone expecting a refund next tax season.

“Put it in your own account,” Jackson said. “Don’t use Green Dot.”

Green Dot declined our request for an interview, but in an email said in part:

“Generally, for a variety of reasons including privacy and security, we do not share details about specific accounts or customer circumstances.

In this case, we can confirm that based on our observations and a review by the IRS, the IRS has requested remaining funds be returned to them immediately.

We’ve also received an update from the IRS and would be happy to provide additional information to Mrs. Jackson to help her seek resolution with the IRS.”

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