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Think Finance wanted to give underbanked consumers access to credit when they needed it, while helping them avoid a bad cycle of debt. To accomplish this, the online payday lender developed the Elastic card, a prepaid debit card with a line of credit of up to $500, that rewards consumers with lower fees for exhibiting good behavior, like making payments on time.
December 3 -
NetSpend Holdings Inc. said it is seeking additional partners in light of the regulatory problems facing its biggest prepaid card issuer, MetaBank.
October 18 -
Meta Financial said meetings with the OTS last week failed to sway the regulator to allow its MetaBank subsidiary to enter any agreements regarding its credit products ...
October 18
In its latest regulatory hit, Meta Financial Group Inc. will have to reimburse customers of a high-interest loan program marketed to prepaid cardholders.
The Storm Lake, Iowa, company, whose MetaBank subsidiary issues prepaid cards for companies such as NetSpend Holdings Inc and AccountNow Inc., said in a Securities and Exchange Commission filing that the Office of Thrift Supervision notified it of the decision on Dec. 28.
In addition to requiring MetaBank to reimburse customers that used the iAdvance product, the OTS said it also is preparing a cease and desist order against the company and considering assessing civil money penalties against the bank, according to the filing.
Meta said it does not know the amount it will be required to reimburse customers or whether monetary penalties will be imposed, it expects "to discuss the terms of the Cease and Desist Order as well as the reimbursement with the OTS prior" to the agency's final determinations.
Problems with iAdvance came to light in October when Meta announced the OTS was forcing it to shut down iAdvance after the agency determined it "engaged in unfair or deceptive acts or practices" in operating the program, which offers prepaid card users small lines of credit.
Under supervisory directives the OTS issued, Meta is also required to obtain the agency's written approval to enter new business agreements or materially amending existing ones.
The issue caused NetSpend, which operates prepaid card programs, to briefly delay its initial public offering and seek new bank partners to issue its cards.
John Williams, an analyst who follows NetSpend for Goldman Sachs Group Inc., said in a research note Wednesday that the concerns over NetSpend's risks stemming from its issuing banks are "a direct offshoot of increased regulatory pressure on payday lenders."
NetSpend said in an SEC filing in November that about 72% of its active cards were issued through MetaBank as of Sept. 30.
