Karen Kidd Feb. 5, 2016, 10:11am


JEFFERSON CITY, Mo. (Legal Newsline) – Caveat emptor, the old Latin saying "let the buyer beware," is good advice for prepaid debit card purchasers, an attorney for a Missouri man suing a prepaid debit card company says.

"Be very careful, do your own due diligence," said Nathan A. Duncan, an attorney with Douglas, Haun & Heidemann in Bolivar, Mo.

That "due diligence" can take any number of forms, Duncan said.

"That can mean hopping online and investigating the company you're going to use," he said. "Look into whether they've had complaints of this type."

Duncan is one of the attorneys representing Kendall Dallas in a class action lawsuit filed Nov. 30 in U.S. District Court for the Western Division of Missouri-Central Division against Green Dot Corporation. The lawsuit accuses Green Dot of violating Missouri Merchandising Practice Act, fraudulent and negligent misrepresentation and conversion.

Green Dot did not respond to repeated attempts for comment.

In early August of last year, Dallas paid approximately $231 for a Green Dot Gold Visa re-loadable prepaid debit card at a Dollar General in Hemitage, according to the lawsuit. Dallas later discovered the card he'd purchased was registered to another user and he was not able to use the card, the lawsuit alleges.

Green Dot promised to reimburse Dallas what he had paid for the card, but later told Dallas the original owner of the card already had been reimbursed, the lawsuit alleges. The lawsuit also claims Green Dot has yet to reimburse Dallas.

Plainttiffs in the case are seeking punitive damages, attorneys fees and costs of the suit, all of which could exceed $5 million. In addition to Duncan, another Douglas, Haun & Heidemann attorney, Craig R. Heidemann, is representing the plaintiffs in the case.

Duncan said he does not know if similar lawsuits are pending against Green Dot.

"So far as I know, we are the only ones who've had a case pending against them," he said.

He also said he doesn't have any data that shows how widespread such alleged problems couldbe in the pre-paid debit card industry but that there's plenty of anecdotal evidence to consider.

"I'll tell you what, if you do even a basic web search, you'll see - at least this company anyway - has had many problems of this type," he said.

At greater risk are those people in the low income demographic, such as Dallas, Duncan said. Dallas is a resident of Hickory County, where the median income is less than $30,000, according to statistics from the Missouri Economic Research and Information Center.

Low income people often are especially vulnerable "to these kinds of fraudulent behaviors and unlawful merchandise," Duncan said.

Duncan also recommended anyone considering a prepaid debit card consider more traditional monetary options, such as banks or credit unions. However, the Federal Deposit Insurance Corporation reports about 68 million Americans either don’t have or don’t want a bank account. That figure suggests a very large number of people in the U.S. could be relying on prepaid debit cards.

A consumer in that situation needs to do his or her homework before purchasing a pre-paid debit card, Duncan said.

"You need to do more than just buy the card that is at your local retailer," he said. "You need to do some investigation to be sure the card company doesn't have a bad reputation."

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