After a lengthy legal process with the Federal Trade Commission (FTC), the Netspend Corporation has come to an agreement. The company, which serves those without a bank, specializes in providing prepaid Visa debit cards.
On November 10, 2016, the FTC alleged that Netspend betrayed its customers regarding the access to money transferred onto its prepaid debit cards. Specifically, the FTC’s complaint put into question some of NetSpend’s marketing messages. Under the USA PATRIOT Act, the FTC claims Netspend’s marketing did not verify consumers’ identities before accounts were activate.
The case examined a certain number of Netspend user accounts between January 2010 through August 2016 and determined the necessary steps to verify identities prior to activation were not taken. To help resolve this, Netspend will continue working with these users to access funds that reached an excess of $40 million. Since September 2016, $3.6 million of that large balance has been accessed by cardholders. The company also plans to refund the $13 million fees charge before August 2016.
Netspend’s official statement on this FTC settlement is as follows: “Netspend is pleased to have resolved this matter. We agree to settle in order to avoid the significant costs associated with protracted litigation and to get back to the business of serving our customers. We do a great deal to encourage card activation and comply with federal law, and we welcome this opportunity to assist those who have not activated their accounts. We look forward to continuing to empower a growing number of consumers and businesses with the convenience, security and freedom to better manage their finances.”
On March 31, the FTC made its filing for the Netspend suit with a request for a stipulated filing in the United States District Court in the Northern District of Georgia. In a 2-1 vote, the FTC’s decision was made final with the approval of Acting Chairman Maureen Ohlhausen’s dissent and statement. In this case, Commissioner Terrell McSweeny decided to add his statement to the issue.
