FTC Sues NetSpend Over Access to Funds
Authored By: Northwest Justice Project
If you do not have a bank account, you might buy prepaid debit cardsand add money to them to buy things and pay bills. The FTC has filed a lawsuit claiming thousands of NetSpend prepaid debit card holders had trouble getting access to cash they loaded onto the cards, or to direct deposits from their paychecks or government benefits. The FTC’s lawsuit claimsNetSpend’s ads told consumers they would have immediate access to funds loaded on the cards and were guaranteed approval for the cards. NetSpend also promised that cardholders disputing transactions would get temporary credits of those transaction amounts, pending investigation.
Despite NetSpend’s promises, the FTC says many consumers also could not access their money immediately. Some lost access for days or weeks or altogether. The FTC also says that in reality, many NetSpend cardholders were not automatically approved to use the cards but, instead, had to go through a sign-up process which sometimes resulted in them being denied and losing any funds placed on the cards. The FTC also says that in many cases, NetSpend did not issue temporary credits during transaction disputes in a timely way, or at all.
Before using a prepaid card, be sure you understand how it works. Read the terms before putting money on the card. Do an online search to check out the company’s track record. If a prepaid card company deceives you about its terms and services, report it to the FTC.