The company behind the celebrity-sponsored Kardashian Kard has sued the Kardashian sisters reality television stars for dropping their endorsement shortly after the prepaid card's introduction.
The card came under fire for charging up to a year's worth of fees up-front. On a month-by-month basis, the card's fee structure was not out of line with what many prepaid cards charge, but the requirement to pay so much at the time of purchase spotlighted the card's cost of ownership, leading some to declare it predatory.
"The bottom line is, we got thrown under the bus," said Christopher L. Rudd, the attorney for Revenue Resource Group LLC, the prepaid card marketer behind the Kardashian Kard. "We brought out a card that was, in many ways, a bargain compared to some of its competitors, and we got trashed for it."
About three weeks after the card's early-November debut, the Kardashians pulled their endorsement, and the website that sold the card was shut down. Revenue Resource Group is suing for at least $75 million after the Kardashians reneged on a two-year contract to promote the card, Rudd said. He added that two celebrities had been ready to sign up to promote similar products before the Kardashians pulled out.
The prepaid product behind the Kardashian branding "had some neat facets," he said. "It really did. It had a lot of neat features that made it great for other licensees."
Shortly after the card's introduction, Connecticut's attorney general, Richard Blumenthal, blasted the product, calling it "filled with 'gotcha' fees and charges … raising concerns about potential threats to consumers, particularly young adults," according to a press release issued at the time.
Though the card could not be purchased by minors, analysts said its celebrity endorsement strongly suggested a focus on teenagers.
Sunrise Community Bank, the holding company for the card's issuer, University National Bank in St. Paul, Minn., had no comment.
The card's cost was $59.95 for six months, or $99.95 for a year; these prices included the card's $7.95 monthly fee and an initial load of five dollars.
Upon its introduction, many perceived the card as a "premium" prepaid product. The Kardashian sisters' celebrity status, paired with the card's high purchase cost, lent it a sense of exclusivity.
Some said the high up-front cost also addressed a long-standing issue for prepaid card companies — that their products are commonly seen as disposable by end users, who buy them for a specific purchase. If users pay as much as a year in fees up-front, they may feel a greater attachment to the card and use it more, observers said.