FTC: NetSpend deceives consumers

by Mark Iandolo |
Nov. 18, 2016, 11:35am

WASHINGTON (Legal Newsline) — The Federal Trade Commission (FTC) announced Nov. 10 that it charged prepaid card company NetSpend Corporation with multiple allegations of customer deception.

 

The FTC alleges NetSpend leads consumers to believe its reloadable prepaid debit card offer is an alternative way to store and immediately access funds. In reality, the FTC believes, consumers cannot locate or access their money once they have loaded funds onto the cards. This occurs because NetSpend allegedly denies or delays activation of the card, or because it blocks consumers from using it. According to the FTC, many consumers who had trouble accessing their funds went through severe financial hardship such as evictions, car repossession and late fees on bills.

 

“Innovative financial products can offer many benefits to consumers. However, when companies promise consumers ‘immediate access’ to their funds, they need to honor those promises,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “We’re committed to protecting consumers – particularly those who are financially strapped – from deceptive practices involving their payment choices.”

 

The FTC voted 2-1 to authorize the staff to file the complaint. Commissioner Maureen Ohlhausen voted no. The lawsuit was filed in the U.S. District Court for the Northern District of Georgia.

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U.S. Federal Trade Commission
600 Pennsylvania Ave NW
Washington, DC - 20580

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