Prepaid Debit Card Companies under Investigation - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Prepaid Debit Card Companies under Investigation

Prepaid Debit Card Companies under Investigation

Prepaid Debit Card Companies under Investigation
The content is accurate at the time of publication and is subject to change.

Prepaid debit cards have their advantages as a safer alternative to cash. Nevertheless, some prepaid card issuers may have been causing users more of an injustice than a service, according to the Attorney General of Florida, Pam Bondi.

Companies Under Fire

Five companies that offer prepaid debit cards are under investigation by the Attorney General’s Economic Crimes Division. The prepaid cards under scrutiny are not affiliated with any banks. The five companies involved are accused of charging excessive and undisclosed fees that can eat up a goodly amount of the cash deposited on the card. Common charges associated with the prepaid cards include fees for reloading funds and transaction fees assessed with each purchase.

The five prepaid debit card issuers named in the investigation are:

  • First Data Corp.
  • Green Dot Corp.
  • Account Now Inc.
  • NetSpend Corp.
  • Unirush Financial Services LLC

Subpoenaed for Information

To kick-start the investigation, subpoenas have been sent to several of the issuers. The subpoenas request that the companies provide information that specifically pertains to the fees it charges users of the cards and how the fee structure is communicated.

The subpoenas also question the deceptive practice of promising to improve customers’ credit scores with the use of the cards. Prepaid debit cards do not involve an actual credit line; users simply load their own funds onto the cards, use the money available and then reload them. Because they have extended no credit, the issuers of the prepaid cards do not report any data about the use of the cards to credit bureaus, meaning their use has no effect on clients’ credit scores. Despite this, some issuers advertise building credit as a benefit of their prepaid cards.

Prepaid Cards are Big Business

The prepaid card industry, which generally serves consumers with poor or no credit, is booming. According to the Mercator Advisory Group, the amount of money loaded onto prepaid credit cards is expected to grow from $36.6 billion in 2010 to $118.5 billion next year. MasterCard forecast an astonishing $840 billion in prepaid loadings by 2017.

With so many consumers using prepaid cards, and so much money at stake, the aim of the Florida investigation is to make sure that consumers are not subject to false claims and deceptive and dishonest practices.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Synchrony and JCPenney Are Still Partners

Posted: October 16, 2018

Synchrony and JCPenney have inked a multi-year deal extending their strategic partnership, which includes their private label credit card program and the JCPenney MasterCard. This extension means that the two will continue to work together ... Continue reading
American Express Makes Referring a Friend to Their Credit Cards More Rewarding

Posted: October 15, 2018

Getting a hefty bonus for referring a friend to American Express can be a great way for cardholders to bank points. The good news is that it just got easier, and perhaps more lucrative due to an upgrade in the American Express refer a ... Continue reading
Capital One’s Credit Wise Adds New Security Features

Posted: October 12, 2018

With data breaches becoming more commonplace, consumers are looking for ways to protect themselves, and now CreditWise, a free service from Capital One, has launched three new features to help them keep identify theft and fraud at bay. The ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!