On November 10, 2016, the Federal Trade Commission (FTC) announced that it had filed a lawsuit in the Northern District of Georgia against a prepaid credit card provider.
The FTC’s complaint alleges violations of Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Specifically, the company allegedly violated the Act by telling consumers they will be able to use their money immediately on their prepaid cards when consumers were unable “to use their cards immediately or access funds on their cards, including for prolonged periods of times–sometimes as much as weeks, or at all.” As consumers were unable to use their cards, the complaint alleges some consumers were evicted, had their cars repossessed, or otherwise experienced financial hardship.
The complaint also alleges the company violated the FTC Act by claiming all consumers were guaranteed approval to use the credit cards when in fact consumers were often not approved, and by representing that it would provide provisional credits for any user-reported accounting errors, which the company failed to do. The FTC seeks an injunction as well as restitution for consumers.
The Commissioners had voted 2-1 in favor of filing the complaint, with Commissioner Maureen Ohlhausen voting against.
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