Pre-paid debit cards have become a benefit to many California consumers. They offer a way for those without a checking account to be able to use a card when necessary. Additionally, they are an alternative method of giving funds to teenagers or college students. One primary assumption with purchasing a pre-paid debit card is that the consumer will actually have access to the funds that he or she has placed on the card, and that the consumer will be able to use the card. The Federal Trade Commission has recently filed a lawsuit against one pre-paid card company, NetSpend, claiming that its deceptive practices have led to consumer protection problems.
At the heart of the matter is NetSpend’s advertising. The company advertisements state that consumers will have immediate access to their money. Additionally, advertising claims that the consumer’s approval is guaranteed. However, in order to comply with federal regulations, the consumer must sign up and prove his or her identity. For some, this can be a problem.
In its lawsuit, the FTC claims that NetSpend’s deceptive advertising has caused financial problems for a number of its cardholders. These cardholders purchased the cards and loaded funds onto them. However, the consumer was unable to immediately meet the requirements for enrolling and identity verification. Thus, consumer funds were loaded on the cards; however, the consumer was unable to use these funds. The FTC claims that this caused financial problems such as being unable to pay basic living expenses, car notes, etc.
The average California consumer expects to be able to use a product such as a pre-paid debit card once it has been purchased. At times, there can be system problems that may slow down the process; however, if the company advertises immediate access, that is what the consumer expects. If this is not what actually happens, the consumer may want to discuss the possibility of pursuing the matter through a consumer protection claim in the California court system.
Source: NBC News, “NetSpend Cards Promised Instant Cash, Didn’t Deliver, FTC Says“, Herb Weisbaum, Nov. 14, 2016