New York Attorney General Letitia James has secured a settlement exceeding $1 million from Ouro Global, Inc., the parent company of Netspend Corporation. This follows an investigation by the Office of the Attorney General (OAG) that revealed violations of consumer protection laws affecting many low-income New Yorkers.
Netspend was found to have illegally frozen customer accounts and allowed debt collectors access to funds meant to be protected. The company also imposed illegal fees on its debit and payroll cards, costing customers significantly, and ran a paycheck advance program with unlawfully high interest rates. As part of the settlement, Netspend will reimburse over $735,000 to affected New Yorkers and amend its policies to align with state laws. Additionally, it will pay more than $350,000 in penalties to New York State.
Attorney General James stated, “Netspend took advantage of tens of thousands of consumers and even deprived vulnerable New Yorkers of their hard-earned benefits like Social Security.” She emphasized her commitment to ensuring companies do not profit through fraudulent practices.
The OAG's investigation highlighted that Netspend breached laws designed to protect those receiving benefits such as Social Security and veterans benefits. In particular, the company's paycheck advance program charged effective annual interest rates surpassing 300 percent in over 4,000 cases, despite state law capping rates at 16 percent for unlicensed lenders.
Further findings showed that Netspend did not adhere to New York’s Exempt Income Protection Act by freezing accounts below legal thresholds and allowing debt collectors access. For instance, in January 2019, a consumer’s account with $1,008.52 was improperly frozen; they were forced to pay over $600 before accessing their remaining funds.
Netspend's marketing misled customers regarding ATM fees; users were charged for all transactions despite claims suggesting fee avoidance via in-network ATMs. Additional banned fees included charges for balance inquiries and declined transactions at ATMs.
Under the settlement terms, restitution will be provided either as account credits or mailed checks depending on account status. Consumers who experienced illegal freezes or fund seizures are encouraged by Attorney General James to report these incidents.
Assistant Attorney General Chris Filburn is managing this case within the Consumer Frauds and Protection Bureau under Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine. The Division of Economic Justice oversees this bureau led by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.