Green Dot Corp. will eliminate its MoneyPak reload cards, which have been targeted by scammers, and instead will let consumers reload prepaid accounts at the point of sale, its top executive said this week.

To use a MoneyPak, consumers buy the MoneyPak card at a store with the cash they want to move onto a separate prepaid card. The MoneyPak has a code, which the consumer must submit online or by phone to finish loading funds.

But there have been reports of scammers exploiting the MoneyPak process, and so the reload cards will be "gone by early first quarter next year," said Steve Streit, Green Dot's chairman, president and CEO. during a July 31 conference call to discuss the bank's second-quarter earnings.

This move will "completely eliminate the opportunity for this third-party, victim-assisted fraud" that has tarnished the company's image, Streit said. In one type of scam, the fraudster poses as a tax collector asking the victim to make a payment by purchasing a MoneyPak card in a store and then providing the MoneyPak number and PIN over the phone.

In MoneyPak's place, Green Dot has deployed a system it calls swipe interface technology, or SwIT, to encourage card users to "Reload @ the Register" by simply swiping their prepaid cards and handing over the amount of cash to load.

Other companies that use Green Dot for reloads, such as PayPal and American Express, have already developed alternatives. PayPal debuted its own reload card with InComm in 2012 and it accepts cash loads through Coinstar machines; Amex's Serve accounts accept InComm's Vanilla reload cards and added a cash reload option in late 2013.

Even though fraudulent use of MoneyPak affected less than 2% of transactions, "it's a big product and we sell a lot of them, so in terms of the number of humans that are impacted, it's just too big to deal with," Streit said. "So the answer is to get rid of the product, get rid of that fraud and push all reload to strictly swipe."

MoneyPak began phasing out in 2012 when Walmart, Dollar General and some other retailers converted to the swipe technology, Streit said.

When a company refers to victim-assisted fraud it often means that a consumer has been scammed through social media or other ways to provide their account information to someone else, said Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group. "Fraud can happen in a couple of ways, through reloads that maybe come from bad checking accounts or something like that, or if a consumer gives out their PIN or account numbers to someone they shouldn't," she said.

In addition to decreasing fraud and protecting its brand, Green Dot's new system reduces costs, Streit added. "You're not printing a zillion MoneyPak packages … it will save expenses," he said.

Green Dot's net income rose 27%, to $14.3 million, in the second quarter from the same period a year earlier. Its operating revenue rose 5%, to $147 million.

Amilda Dymi contributed to this story.