Prepaid Debit Card Reviews, Complaints, Etc

Author: Shane Tripcony

  • A Personal Finance Teacher’s Aide

    A Personal Finance Teacher’s Aide

    Scholarships are available to this November’s Jump$tart National Educator Conference in Washington, DC

    by Shane Tripcony

    The statistics paint a grim picture. According to the 2012 “Financial Literacy Survey of Adults,” two in five Americans gave themselves a grade of C, D, or F on their knowledge of personal finance topics. And if anything, the survey results indicate that those marks may have been too generous.

    Indeed, 56 percent of those surveyed conceded that they don’t have a household budget and 39 percent reported not having any non-retirement savings. Ensuring that today’s young people don’t eventually find themselves in the same financial predicament as their elders is one of the main goals of the Jump$tart Coalition’s National Educator Conference, which will be held in the nation’s capital this November 1 through November 3.

    Now in its fifth year, this annual conference is devoted to providing Pre-K through grade 12 teachers with the knowledge and resources they need to effectively instruct students about a wide range of personal finance topics. Designed with classroom teachers in mind – both those who lead stand-alone courses in personal finance or who incorporate it into other classes – this year’s gathering will include sessions on everything from curriculum development to what constitutes smart college borrowing for high school students to Federal Reserve Bank resources available to secondary educators.

    The credit bureau Experian recently announced that it would provide 20 scholarships to teachers that have not attended the conference before. Experian, one of the underwriters of this year’s conference, will cover attendees’ registration fee of $395, all conference meals and receptions as well as two nights in a hotel; travel and incidental expenses are not included. Anyone interested in applying for the scholarship should email [email protected] and include the following information: the teacher’s full name; the full name and address of the school or school district where the teacher is employed; and a short description of the course or unit in which the applicant teaches personal finance.

    All applicants must be full-time, licensed and certified teachers currently employed by a school district. Although there is no deadline to apply, scholarships will be awarded on a first-come, first-served basis.

  • Study: Post Recession Changed Behaviors and Attitudes

    Study: Post Recession Changed Behaviors and Attitudes

    New research by Chase and Aite Group reveals how the worst economic downturn since the Great Depression has affected Americans

    by Shane Tripcony

    The so-called Great Recession may have officially ended in June of 2009, but its impact has proved to be longer lasting. That is the main finding of a recent study conducted by Aite Group on behalf of Chase Blueprint.

    The study’s results, released in August, were drawn from interviews of over 1,200 American consumers.  Participants were asked how they have managed their finances since the end of the economic downturn and how their experience during the recession has changed their approach to money management. According to the study’s findings, the summer of 2009 was by no means the beginning of rosy economic times for many people. While it’s true that the number of respondents who rated their economic health as “excellent” grew from 18 percent in 2010 to 22 percent in 2013, the percentage of those deemed their finances “very poor” also spiked, from seven percent to ten percent.

    A sizable chunk of survey respondents also reported losing financial ground since the start of the economic recovery. Among those who declared their financial life either “excellent” or “decent” in 2010, 25 percent said it had deteriorated in subsequent years.

    Even though better economic times have not benefited everyone, the study offers proof that many Americans are more in control of their personal finances today. In 2010, only 41 percent of those polled considered themselves financially literate. Today, that number has risen to 55 percent. The biggest improvement was seen in the Generation Y demographic, largely people in their twenties and a segment of the population especially hard hit by the recession. Among that group, there was a 78 percent increase in those who consider themselves financially literate, from 28 percent in 2010 to over 50 percent today.

    Improved financial savvy also appears to be translating into better habits. For instance, survey respondents reported saving more money and spending less today than in the past. Additionally, those who have seen their financial health improve since the end of the recession are also far more likely to pay off their credit card bills in full every month than before the downturn. In 2008, only 43 percent of that group would completely erase their credit card debt monthly. Today, that number is closer to 60 percent.

  • Hackers Target Walmart MoneyCards

    Hackers Target Walmart MoneyCards

    Walmart MoneyCard holders around the U.S. report being swindled 

    by Chris Warren

    It has been a miserable month for a small number of Walmart MoneyCard customers. According to a story on the website ConsumerAffairs.com, a host of Americans who use the retailer’s general purpose reloadable prepaid debit card have had their accounts hacked recently.

    In the piece by writer Jennifer Abel, Walmart MoneyCard holders in Missouri, Ohio and California all reported very similar experiences in which a thief in New York City drains victims’ accounts by getting hold of their account information and then making purchases at a Target in Brooklyn. One of the victims, Kelly L. from Canton, Ohio, complained that she checked her account balance on Sept. 9 and discovered that it had just $1.41, thanks largely to 5 purchases made at a Target in New York City the day before. “I am waiting for [Walmart] to send me a new card so I can get the amount owed to me, then I am closing my account,” she wrote.

    In a follow-up story on Sept. 18 Abel wrote that Walmart had neither responded to her requests for comment nor resolved any of the earlier cases. Abel did, however, quote the Walmart cardholder policy, which urges anyone who believes their card or PIN has been lost or stolen to notify the company immediately. “You will not lose any part of the money on your card based on unauthorized use if you have exercised reasonable care in safeguarding your Card and PIN from risk of loss or theft,” it says. “However, if these conditions are NOT met, you could lose the lesser of $50 or the amount of unauthorized use from your Card before you notify us that your Card has been lost or stolen.”

    In other words, the terms of the cardholder policy give some assurance that those who were victimized by the New York fraudster will get most, if not all, of their money back. But as Abel notes – and as we have reported on in the past – prepaid debit cards offer far less protection than debit or credit cards in the event they are lost or stolen. That said, if you are unfortunate enough to fall victim to a criminal, the most important thing to do is to alert the card issuer right away and continuously follow-up with the company to ensure that you get as much of your money back as possible.

  • Prepaid Debit Card Scams Proliferate

    Prepaid Debit Card Scams Proliferate

    Prepaid debit cards are becoming an increasingly popular tool for criminals.

    By Shane Tripcony

    Over the summer utility customers from Virginia to Pennsylvania to California have been targeted in a scam that closely resembles one that was reported on recently by The Beach Reporter in Manhattan Beach, California. In an article titled, “Edison warns its customers of utility bill scam,” the paper told its readers that Southern California Edison customers have been receiving phone calls from people claiming to be from the utility demanding payment for past-due electricity bills.

    The paper reports that the callers threaten Edison customers with having their electricity cut off if they don’t make an immediate payment using a prepaid debit card. As of September, Edison says that about 150 businesses and residents had been victimized at an average cost between $800 and $1000.

    While popular, the utility scam is not the only type that relies on the use of prepaid debit cards. According to a story in the Arizona Republic, two citizens of Surprise, Arizona were indicted in a $2.5 million income-tax scheme involving prepaid debit cards. According to the charges brought by the U.S. Department of Justice, the alleged perpetrators told victims that they could receive “Obama stimulus money” or “government funding” via a prepaid debit card. In return for that promised government money, victims handed over personal information that was used by the alleged criminals to file false federal income-tax returns. In total, the 18-count indictment by the federal government says that the perpetrators received over $2.5 million in refunds.

    A similar scheme also resulted in prison time for a Cincinnati man. According to a report on Cincinnati.com, Dione Howard was sentenced to 12 months and one day in prison and ordered to pay $30,129 to the Internal Revenue Service for his involvement in a crime involving prepaid debit cards. Citing court documents, the report says that Howard purchased 18 names, social security numbers and dates of birth and used them to file false income-tax forms. Howard received a total of $30,129 in fraudulent refunds.

    “This unscrupulous defendant thought he had figured out a clever scheme to thwart the IRS and steal from the American taxpayers,” the story quoted Kathy Enstrom, special agent in charge, IRS Criminal Investigation in the Cincinnati Field Office as saying. “The IRS has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system.”

  • Tax Refunds And Prepaid Debit Cards

    Tax Refunds And Prepaid Debit Cards

    Prepaid debit cards have recently become a favored way for states and the federal government to pay tax refunds, but for consumers, whether it is a benefit or not – the answer is, it depends.

    By Shane Tripcony

    The arguments in favor of the use of prepaid debit cards over paper checks in states like Connecticut, Georgia and Louisiana are similar. Not only do citizens who lack a bank account – and therefore cannot take advantage of direct deposit – receive their refund quicker than if it came through the mail in the form of a paper check, but the governments themselves like prepaid debit cards because it save them money.

    Those are a few of the issues John Friedman took up in a recent story for Bloomberg Law entitled, “Policy Perspectives On Tax Refunds: An Economic Analysis Of Government-Sponsored Debit Card Refunds.” Friedman, an assistant professor of public policy at the Harvard Kennedy School and a faculty research fellow at the National Bureau of Economic Research, does an in-depth cost-benefit analysis of the embrace of prepaid debit cards and arrives at some conclusions that go counter to many of the arguments policymakers have made.

    To be sure, Friedman acknowledges just how popular prepaid debit cards have become as a way to dispense tax refunds. In fact, he notes that in the 2012 tax year, almost 20 million taxpayers opted for prepaid debit cards to receive their refunds. Still, despite that increasing popularity, Friedman takes direct aim at the seemingly uncomplicated assertion that governments, and thereby taxpayers, save money by utilizing prepaid debit cards.Even though states like Connecticut report that they saved about $300,000 by sending out prepaid cards instead of paper checks in 2012, Friedman points out that those calculations fail to acknowledge that governments don’t pay account setup fees; instead, taxpayers do. “It is true that state governments can cut their own costs by switching to debit cards from paper checks, but this simply pushes costs off the government budget and onto taxpayers directly in the form of fees,” he writes. “The roughly $1 of government savings is very small in comparison with the average fees incurred by individuals who received their tax refunds via debit card.”

    Although he acknowledges that some taxpayers truly benefit by receiving their tax refunds on a prepaid debit card instead of a check, in particular because of the speed at which it arrives. This speedy refund, he says, means that high-interest debts on payday loans can be paid down quickly and that exorbitant check cashing fees can be avoided. But Friedman also says that the fees that come with the normal use of prepaid cards could make them a less attractive option for others. “Therefore, use of the debit card to receive the tax refund is not costless to individuals,” he says. Because prepaid debit cards are a mixed bag, good for some but bad for others, Friedman urges governments to still offer taxpayers the option of receiving refunds via a paper check.

  • Oakland Issues Hybrid ID – Prepaid Debit Cards

    Oakland Issues Hybrid ID – Prepaid Debit Cards

    by Shane Tripcony

    From a municipal public policy standpoint, Oakland, California’s decision earlier this year to issue identification cards that also act as prepaid debit cards was hailed by some as a double play. For one thing, the decision by Oakland officials to make ID cards bearing a person’s photo, name, address and signature available was a way to provide citizens, both legal and illegal, a route to utilize local government resources, like museums and libraries. In providing this kind of ID card, which can’t be used in lieu of a driver’s license or for air travel, Oakland was following the lead of other cities, such as nearby San Francisco and New Haven, Connecticut.

    But according to a recent article on Governing Magazine’s blog, Oakland is the first city in the nation to provide an option for the users of the municipal ID card to also use them as a prepaid debit card. According to the article by J.B. Wogan, the reason Oakland chose to do this is because of a desire to encourage more low-income residents – typically the segment of the population that does not already have an ID – to have access to traditional banking services. Often, citizens who don’t have bank accounts rely on expensive check-cashing and payday lenders for their financial service needs.

    The Oakland initiative adding a prepaid debit card function to municipal IDs is attractive enough that about 2,000 citizens have already gotten them and cities like Los Angeles and New Haven are considering rolling out their own programs. But not everyone is a fan of the type of prepaid card Oakland makes available to its citizens. In particular, the city is being criticized for what some see as the excessive fees associated with the card. To get the ID, citizens have to pay a flat $15 fee. Once the prepaid debit card function is enabled, users pay a wide range of other fees, including a monthly service fee of $2.99, a point of sale charge of $0.75, $1.50 for in-network ATM cash withdrawals and $2.99 for customer service assistance.

    While these fees are not uncommon in the realm of prepaid debit cards, critics argue that Oakland can and should do better. In an open letter to the National League of Cities, Michelle Jun, a senior attorney with Consumers Union, the policy and advocacy arm of Consumer Reports, expressed concern that city-issued prepaid cards weren’t offering citizens the best possible deal. “We believe that given the position of a municipality as a trusted entity, cities have the added responsibility of providing the most consumer friendly financial products and services,” writes Jun. “We believe the government and other public entities that choose to link a prepaid card option to any card or service provided by a municipality should provide its citizens with an opportunity to access a product or service that is fairly priced and provides the best value to the user.”

    As Wogan points out in his blog, Oakland’s fees are lower-than-average, according to a study done last year by the Pew Charitable Trusts. Still, according to Jun and others, cities issuing prepaid debit cards should ensure that they have as low fees as possible and provide as much protection against loss or fraud as is feasible.

Prepaid Debit Card Reviews, Complaints, Etc