Settlement Reached in Florida AG Prepaid Investigation (Jan. 17, 2013)
Jan. 17, 2013
A group of prepaid card providers has reached a settlement in a Florida investigation over fee disclosures and what the state’s Attorney General said were misleading claims regarding credit. The investigation was launched in early 2009 into business practices of AccountNow, First Data, Green Dot, NetSpend and UniRush Financial Services, all of which were accused of misleading customers by allegedly failing to disclose fees in their marketing materials and claiming their products would help customers build positive credit. The companies denied any wrongdoing throughout the investigation, and maintained their innocence in the consent agreements signed this week.
Under terms of the settlement, the companies must provide “clear and conspicuous” disclosure of fees on their marketing materials and are prohibited from making claims that using prepaid cards improves a cardholder’s credit. The deal also calls for the firms to pay a combined $325,000 to the State of Florida to cover the costs of the investigation, along with $115,000 to charitable programs.
Terry Maher, an attorney with law firm Baird Holm LLP, says the case isn’t likely to have much of an impact on the industry as a whole, or spur future investigations. “Given the relatively small financial settlements and no order for any consumer restitution, I don’t think this will prove to be an issue many state AGs will pursue,” Maher tells Paybefore. “The main impacts appear to be on fee disclosures in advertisements, as most providers already make [fee disclosures] on the package,” he says, adding that the terms of the settlement will eventually be superseded by whatever fee disclosures are required by the Consumer Financial Protection Bureau, which is due to issue new federal regulations on network branded prepaid cards sometime this year or early next.
