By Ellen Robinson
(CN) – Federal regulators sued the company behind a popular prepaid debit card, claiming it deceived consumers about their eligibility for the cards and their access to funds deposited.
In a complaint filed in the Atlanta Federal Court on Nov. 10, the Federal Trade Commission claims NetSpend Corporation wrongly solicited customers with a false come-on that promised everyone is eligible for its prepaid cards.
The commission claims that once they got their NetSpend card, many consumers discovered they did not have immediate access to their funds and in several instances, were never given access to their deposited money because NetSpend denied and delayed activating their cards.
This, the regulator says, flew in the face of claims Netspend made in advertising that assured consumers they would have immediate access to their money, and that deposited funds are “always available.”
According to the complaint, federal law requires that a verification process takes place before debit cards can be activated and that many consumers have a difficult time meeting its requirements.
Many consumers were denied access to their funds for weeks and some never gained access to their funds, the commission says.
As a result, many of those who could not access their funds suffered severe hardships such as eviction, car repossession, and various late fees on bills, the complaint says.
The commission wants the federal court to order NetSpend to return the money it has collected to consumers and to allow access to funds that remains in NetSpend accounts.