Refund checks sent to more than 430,000 NetSpend prepaid card users
More than 430,000 consumers who were unable to access funds they deposited on NetSpend prepaid cards will receive refund checks, the Federal Trade Commission said Monday.
The refunds stem from a March 2017 settlement that resolved the commission’s charges against NetSpend, an Austin, Texas-based division of Total System Services.
The FTC alleged in November 2016 that the prepaid card issuer deceived consumers in its advertising. Ads for NetSpend cards featured claims that getting approved was easy, and funds would be available right away.
The FTC charged that many NetSpend customers were unable to access their funds for long periods of time, and that some of them suffered severe hardships such as evictions and car repossessions. Customers who could not access some or all of their funds were also charged account maintenance and usage fees, according to the complaint.
Prepaid card companies are required to verify customers’ identities before making funds available to them, which can result in delays.
Under the settlement, NetSpend agreed to provide monetary relief — and also to comply with certain standards regarding its advertising material— but did not admit wrongdoing.
The company said last year that it agreed to settle the charges in order to avoid the cost of litigation and to get back to the business of serving its customers.
As part of the settlement, NetSpend agreed to provide refunds to customers who requested them prior to Oct. 7, 2017. The company also agreed to send to the FTC any fees NetSpend had collected that were eligible for refund, but were not paid out during the consumer redress period.
The checks that are being mailed out by the FTC, which come from the money that NetSpend sent to the commission, total more than $10 million, or an an average of roughly $23.25 for each affected consumer.