On March 31, 2017, the Federal Trade Commission (“FTC”) announced that it had agreed to settle charges with a prepaid debit card provider for $53 million in monetary relief applied to balances and fees in customers’ accounts. According to the complaint brought by the FTC in the Northern District of Georgia, the company was alleged to have violated section 5 of the FTC Act, 15 U.S.C. § 45, through false and deceptive marketing. The company allegedly targeted consumers who have difficulty obtaining regular banking services, marketing that its prepaid cards, and the funds placed on them, could be used immediately. According to the FTC, consumers experienced unexpected delays in accessing their funds and the company froze access to funds when there were unauthorized charges. The FTC also accused the company of being unresponsive to consumer complaints, with the delays causing consumers to face hardship, such as evictions, repossessions of property, and late fees.
Under the terms of the stipulated order, in addition to the monetary judgment of up $40 million in relief for customer balances and $13 million in customer fees, the company agreed to discontinue any practice misrepresenting its prepaid cards in future marketing materials.
The Enforcement Watch previously covered the FTC’s filing of the complaint; that coverage can be found here.