Florida Attorney General Pam Bondi is investigating popular debit card issuers for possible deceptive and unfair business practices. Her office delivered subpoenas to Green Dot Corp., NetSpend Corp., First Data Corp., Account Now Inc. and Unirush Financial Services LLC, all issuers of prepaid debit cards.
The issue that is at hand is the failure of firms to properly disclose all fees that a customer could expect to pay. Prepaid debit cards are often utilized by customers shut out of the banking industry due to credit and prior banking problems. This less sophisticated clientelle often lacks the understanding of complex financial products and even more complicated fee schedules.
All five debit card issuers are being investigated for failure to properly divulge all fees clearly and conspicuously to clients. Account Now Inc and Unirush Financial Services LLC are additionally facing scrutiny due to claims the companies made that customers’ credit scores would improve based on their use of the products. Bondi’s office will be looking for evidence that the companies regularly reported positive information about their customers to at least one of the three main credit bureaus. Of course, prepaid debit card use normally is not reportable to credit bureaus as a tradeline, since no actual use of credit has occurred.
Prepaid debit cards are expected to become one of the fastest growing financial products. This is due to changes that may shut out many customers from traditional banking and lending products.
Banks have become more selective in how they lend due to new restrictions on fees and interest rate hikes. Even checking accounts are getting more expensive, which may push more low income customers to choose to become unbanked, thereby making prepaid debit cards an attractive option. MasterCard predicts that prepaid debit card usage could increase by over twenty fold over 2010 usage by 2017.
Bondi’s office is sending a message that no financial sector is immune from consumer protection laws that require full disclosure of fees. For customers of these products, it shows that even prepaid debit cards can carry a number of fees that they may have been trying to avoid by shunning credit cards and checking accounts.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."