Bank Card Issuer Agrees to Pay $250,000 in Redress to Settle Charges of Misleading Public Benefits Recipients Regarding Electronic Transfers to Bank Accounts

ATM Cards Promoted as Having "No Up-Front Fees" and "No Overdraft Protection Fees"

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The Federal Trade Commission has negotiated a settlement agreement with an Atlanta, Georgia company, under which the company has agreed to pay $250,000 in consumer redress for allegedly misleading public benefits recipients and other consumers in its marketing of the "Delaware Bank Card," an automated teller machine (ATM) bank card that offers direct deposit services with an affiliated bank. The company, DBC Financial, Inc. ("DBC Financial"), primarily targeted Social Security recipients by offering, among other services, a direct deposit service for Social Security checks. The proposed settlement would bar DBC Financial, a Delaware corporation that provides marketing services to banks, from making the misrepresentations in the future.

According to the Commission's complaint, DBC Financial falsely represented, in its marketing of the Delaware Bank Card, that: 1) the use of the Delaware Bank Card requires no up-front fees, when, in fact, use of the card requires an account set-up fee of $19.95, as well as a monthly service fee of $9.95; 2) the Delaware Bank Card is affiliated with a U.S. government agency, institution or program, when in fact it is not; and 3) the use of the card automatically provides free overdraft protection services of up to $1,000 a year, when in fact the card charges an overdraft protection fee of $19.95 for every month in which the consumer's account is overdrawn by up to $80.00. DBC Financial's marketing of the card coincided with the launching of a U.S. government program to encourage recipients of public benefits to receive their payments through electronic fund transfers to bank accounts.

"Cheating consumers is never acceptable, but it's particularly outrageous when the most vulnerable people are the targets," said Director of the FTC's Bureau of Consumer Protection Jodie Bernstein. "This settlement is designed to bring DBC Financial's deceptive practices to a screeching halt and to make sure that consumers get what they're promised in the ATM marketplace."

The proposed settlement would prohibit DBC Financial, in connection with the advertising or sale of the Delaware Bank Card or any Bank Card or Bank Card-related service or product, from engaging in misrepresentations or material omissions in the future. In addition, the order would require the company to clearly and conspicuously disclose, in connection with any representation about the availability of electronic transfer funds from any government entity, the following: "NOTICE: The [Delaware Bank Card or Name of Bank Card] is NOT affiliated in any way with any federal government agency or program." This disclosure would not be required, however, to the extent that the company is promoting a U.S. Treasury-designated Electronic Transfer Account ("ETA") on behalf of a financial institution that is participating in the government ETA program.

The order would also require DBC Financial to pay $250,000 for a consumer redress program and associated administrative costs. Consumers eligible for the redress fund are those customers who, as of August 31, 1999, had an active Delaware Bank Card account and were charged an account set-up fee. In addition, DBC Financial has agreed to waive the account set-up fee for all Delaware Bank Card accounts opened between August 31, 1999 and January 31, 2000. The order also contains recordkeeping and monitoring provisions that will enable the FTC to monitor DBC Financial's ongoing compliance.

A summary of the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 30 days, until March 6, 2000, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

The Commission vote to accept the proposed consent agreement and place it on the record for public comment was 5-0.

The FTC was assisted in its investigation of DBC Financial by the Social Security Administration, U.S. Department of the Treasury, and the Federal Deposit Insurance Corporation.

NOTE: This proposed consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, proposed consent agreement, and an analysis of the proposed consent order to aid public comment, are available from the FTC's web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 992-3228)

Contact Information

Media Contact:
Mitchell J. Katz
Office of Public Affairs
Staff Contact:
Michelle Chua
Bureau of Consumer Protection