WASHINGTON — First California Bank in Westlake Village, Calif., and an affiliated prepaid card provider must pay fines of over $1.7 million for how they used a reloadable card product to deliver federal benefits payments, the Federal Deposit Insurance Corp. said Friday.

The $1.74 billion-asset bank, whose parent company is being acquired by PacWest Bancorp in Century City, Calif., must pay $600,000 in civil money penalties under a settlement with the FDIC. Achieve Financial Services, an Austin, Tex., company that offers the MasterCard-branded AchieveCard, must pay $110,000. Achieve must also pay roughly $1.1 million in restitution to over 64,000 cardholders.

The FDIC alleged that Achieve and First California Bank violated provisions of the Federal Trade Commission Act prohibiting "unfair and deceptive practices" in how they marketed and serviced the AchieveCard Prepaid MasterCard. (Achieve also has a Visa prepaid card issued by a different bank.)

The agency said in a press release that Achieve's website contained certain representations and omissions that were misleading, including claims about card features that were not actually available to customers. The FDIC also alleged that customers were charged fees "that were not clearly disclosed."

"Achieve's error resolution procedures imposed additional, undisclosed requirements on cardholders," the FDIC's press release said.

The agency also issued separate consent orders for both First California and Achieve. The bank, without denying or admitting guilt, was ordered to correct all violations of law, establish a compliance management system to address consumer protection risks, ensure better oversight of third-party activities and reevaluate the effectiveness of the bank's audit program, among other requirements. (In disclosures to the Securities and Exchange Commission, First California Financial Group, the bank's holding company, said it plans to wind down the division that runs its prepaid card programs.)

Achieve, which also did not deny or admit guilt, must similarly take steps to improve its compliance program. The company has also agreed to provide restitution to customers covering incidents from April 2011 to January 2013. The FDIC's press release said First California Bank is ultimately on the hook for any restitution that is not paid by Achieve.

On May 14, PacWest announced it had obtained final regulatory approval to acquire First California Financial Group for $231 million in stock.

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