The Bancorp Bank, among the largest prepaid card issuers, will pay $2 million to settle claims that it charged fees higher than those disclosed to its customers.
As reported in American Banker, the Federal Deposit Insurance Corp. (FDIC) put into place an order that said the issuer had charged those higher fees over a period of roughly four years – thus the penalty for Bancorp Bank, which is based in Delaware. The agreement to pay the fine also comes with neither admission nor denial by Bancorp of wrongdoing.
Under the terms of the agreement, Bancorp has 30 days to offer up a restitution plan to the FDIC. That restitution would go to consumers who had cards with the company and who were charged the higher fees from early December 2010 to early November 2014.
In terms of scope, the financial publication reported, Bancorp Inc., which is the parent company, posted $53.4 million in prepaid card fees in 2017, a gain of 4 percent year over year. Income from those same fees was up 17.5 percent over the same period, to $14.1 million.
The report noted that the firm holds deposits while partnering with firms that range from traditional finance firms and FinTech enterprises – offering online accounts, mobile accounts for small businesses and prepaid cards. Should the FDIC “not object” to the proposal, Bancorp has 90 days to reimburse those affected. In addition, as noted in the order, Bancorp has to hire an independent auditor to help monitor the reimbursement process, while the FDIC will have, through its regional director, “unrestricted access” to that oversight.