FTC says NetSpend decked consumers with deceptive claims for prepaid debit cards

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From the perspective of consumers, the whole purpose of prepaid debit cards – their reason for living, if you will – is to give consumers immediate access to their money. Those cards are an especially important financial lifeline for people who don’t have traditional bank accounts. In pitching its reloadable prepaid cards, NetSpend Corporation promised consumers “immediate access” to their funds with “no holds, no waiting.” But according to an FTC complaint, the defendants’ business practices rendered that claim and other representations deceptive.

“Immediate access”? Not so fast, alleges the FTC. NetSpend’s ads were replete with claims like “No Waiting!” and “Use your card immediately.” But the FTC says many consumers experienced delays in accessing their funds both in the initial activation process and later. For example, despite the company’s “use it today” claim, consumers have to go through an identity verification process required by law before the prepaid debit card can be activated – a process with requirements many people have difficulty satisfying.

The upshot? People who loaded funds onto NetSpend cards often had to wait – and wait and wait – to access their own hard-earned money. The FTC says those delays resulted in severe financial hardship to consumers, including evictions, repossessed cars, and late fees on bills.

The complaint also alleges that many customers who closed their accounts and asked for refunds had to wait several weeks to get their money back. In other cases, NetSpend imposed fees that depleted the funds from cards after consumers were unable to activate them.

The complaint takes on other instances in which NetSpend’s business practices were at odds with its marketing claims. For example, the lawsuit challenges as misleading NetSpend’s representation that consumers are “guaranteed approval” for a card. The FTC also alleges that NetSpend said it would grant provisional credit when consumers dispute charges on their cards, but often failed to live up to that promise.

The lawsuit was filed in federal court in Atlanta. If you work in the financial services sector or have clients interested in alternative payment methods, this is a case to watch.

 

Comments

Direct Deposit Scam! I changed my direct deposit from my BofA checking to my Net Spend Prepaid Debit card to avoid my car insurance from lapsing. In the state of Nevada you can not be without auto insurance for 24 hours or you will receive a $500. DMV fee, plus cancelled registration and penalty and fees from the courthouse. I changed my direct deposit to Net Spend to avoid fees and penalties however my direct deposit never credited to my long standing Netspend account. My car is at risk of repossession. I scheduled a payment with my car company to avoid repossession, my car payment was declined so Im screwed. I want to SUE!!!!!!! For all damages incurred due to their FAILURE to uphold their advertisement.

I go through Brinks...which is a part of the Netspend family. On their advertisements, they talk about getting your pay checks in as little as 2 days prior to a consumers regular payday. I have the times when my bank pays me on Wednesdays....9:06pm, 9:36pm and 10:06pm. When I don't get paid, I have to wait until 5:00am on thursdays to get paid. That right there says that they DO NOT comply to their advertisements. When consumers complain, they end up freezing their accounts....at times. It is ridiculous.

I bought a net spend card to pay a bill and after successfully activating the card I asked if I could put money on it and use it to pay a bill and was told yes I was ready to go. This was not so as I found out when I tried to pay my auto insurance bill.
They now want me to send a copy of the reciet with the 440.00 I loaded on it with my government issued ID and a soscial security card which I will have to go get at great cost to me in time and gas money and they want other things as well all with matching adresses.
Im very angry about this . I feel decieved and ripped off. Will take 2 to 6 weeks from the time I aply for a new soscial security card not to mention all the other hoops they did not tell me I would have to jump thru before I put the money on the card. Thank you

You can tell the FTC about a problem you have with a business. Go to www.FTC.gov/Complaint. The information you give goes into a secure database that the FTC and other law enforcement agencies use for investigations.

I recieved a card as a gift - 12/2019 - same issues, could not access the funds without a LOT of difficulty. I'm a bookkeeper.
I have now recieved a new 'credit card' in the mail - that I did not order, and there is no way to contact anyone.
If there's a class action lawsuit happening, I'm in.

apparentetly this bank is a farce. why they still selling prepaid cars at Safeway a reputable corporation?

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