Prepaid Debit Card Reviews, Complaints, Etc

Tag: prepaid cards

  • New FBI Prepaid Card Scam – Alert By Better Business Bureau

    New FBI Prepaid Card Scam – Alert By Better Business Bureau

    Criminals have certainly been hard at work lately. As anybody who has picked up a newspaper or logged onto the Internet recently knows, retail giant Target and tens of millions of its customers were the victims of a holiday season heist of payment and other personal information. And on January 17th, the Better Business Bureau issued an alert about a new FBI prepaid card scam.

    According to the announcement from the Council of Better Business Bureaus (BBB), this most recent thievery attempt involves a phone call from someone claiming to be an agent from the Federal Bureau of Investigations (FBI). The caller impersonating an FBI agent follows a familiar script, according to the BBB. “You answer the phone. The caller ID says “Federal Investigations,” and the person on the other line claims to be an FBI agent. He or she says the FBI is monitoring your online activity, and they know you have an overdue payday loan.”

    From there, the BBB says a caller will demand that whoever answered the phone pay the alleged debt off instantly via a prepaid debit card or wire transfer. If someone fails to do so, the supposed FBI agent will threaten legal action and jail, an especially unnerving threat because the caller often has personal information such as a social security number, address and place of work.

    No matter how persuasive someone may sound on the phone, the BBB says to never agree to pay anything. “Despite the threats, these “FBI agents” don’t have power over you,” reads the BBB’s alert. “Don’t give in and pay money you don’t owe; it’s likely scammers will just be back for more.”

    To help consumers avoid becoming victim to these scams, the BBB suggests taking the following steps. First, hang up and don’t call the number back. “It is temping to get the last word, but you may end up giving scammers information they can use later.” After hanging up the phone, the BBB suggests contacting the local police department to report the impersonation of a law enforcement officer.

    Additionally, the BBB points out that caller ID spoofing is easy so don’t be fooled by what appears to be a legitimate institution. If you do stay on the line with the caller, ask him or her for an official validation notice of the debt. “Debt collectors are required by law to provide the information in writing. The notice must include the amount of the debt, the name of the creditor and a statement of your rights under the Fair Debt Collection Practices Act,” reads the statement. “If the self-proclaimed collector won’t provide the information, hang up.”

     

     

     

     

  • Prepaid Card Fraud Controllable

    Prepaid Card Fraud Controllable

    A recent report by Mercator Advisory Group examines the vulnerability of prepaid debit cards to criminals.

    by Chris Warren

    Prepaid debit cards make it into the news a lot these days. A lot of the time stories are focused on the maneuvering of large financial services companies like Chase and American Express and the various strategies they’re implementing to grab a larger chunk of this ever-growing market.

    But there has also been a steady stream of news recently about fraud involving prepaid debit cards. For instance, in mid-November six Yonkers, New York residents were arrested and charged with hacking into bank financial systems and swiping prepaid debit card information that enabled them to steal $45 million. There have also been frequent reports of criminals posing as utility workers, who threaten victims with shutting off their power unless they put money on a prepaid debit card.

    While the use of prepaid debit cards by criminals is gaining notoriety, the scope of the overall problem may not be so dire. Indeed, according to a recent report by Mercator Advisory Group, a consulting company, fraud involving prepaid debit cards is much smaller than what takes place with debit cards. The report, “Prepaid Card Fraud and Risk Controls in the United States,” notes that criminals target credit, debit and prepaid cards alike simply because they all have some level of weakness that can be exploited.

    Prepaid Card Fraud Controllable

    In addition, Ben Jackson, the report’s co-author and a senior analyst at Mercator’s Prepaid Advisory Service, insists that further regulation of the industry isn’t necessary. “Prepaid fraud is a serious, but manageable problem, as long as the members of the prepaid value chain work together. There is nothing inherent to prepaid that makes it more or less risky than other financial products,” he says.

    Furthermore, Jackson outlines a variety of best practices that can be implemented to thwart criminals. For instance, the report says that card issuers and retailers should not be hesitant to say “no” to customers who raise red flags. In addition, the report encourages companies and banks to ask for additional documentation in situations when they feel it’s warranted and also to create a list of problematic names, addresses and phone numbers.

  • Girl Scouts Embrace Prepaid Cards

    Girl Scouts Embrace Prepaid Cards

    A Girl Scouts chapter strikes a deal with prepaid card company, SpendSmart Payments.

    by Chris Warren

    Thin Mints, Samoas, Tagalongs and Lemonades are definitely not financial terms. Yet the truth is that, aside from fundraising, one of the main reasons Girl Scouts from across the country sell these and other varieties of cookies is to learn something about money management and running a business. Think about it: Successfully selling hundreds or thousands of cookies requires smart marketing and sales strategies, wise inventory management as well as record keeping and order tracking.

    While involvement with the organization’s sprawling cookie business is certainly one way for young girls to become more financially aware and savvy, one Girl Scouts chapter has gone a step further. In October the Charlotte, North Carolina-based Hornets’ Nest chapter announced that it had established a partnership with SpendSmart Payments Co., a financial services outfit and prepaid debit card issuer based in San Diego, California.

    According to a recent story in The Kansas City Star, SpendSmart is crafting a financial education program that will be offered starting in January of 2014 to the 16,000 girls in North and South Carolina who make up the Hornets’ Nest chapter. With materials designed to appeal to girls from kindergarten through high school, the curriculum being developed by SpendSmart is meant to help girls understand the value of money and credit, as well as learn how to budget and use plastic wisely.

    “That last point of emphasis caught my attention,” Kansas City Star reporter Steve Rosen wrote. “As part of its partnership, Scouts 13 and older can sign up for the SpendSmart Prepaid MasterCard.”

    It is understandable why SpendSmart would be eager to become well known by thousands of young girls. The company offers prepaid debit cards specifically designed for teens and parents. Among other features, SpendSmart cards alert parents via text or email whenever a purchase is made, allowing them to monitor how well (or poorly) kids are spending money.

    Rosen points out that SpendSmart charges a $3.95 monthly fee, an amount that is both far higher and lower than other prepaid debit cards. He also notes that prepaid cards like those offered by SpendSmart also charge for withdrawing money from an ATM, replacing a card and checking an account balance. “The upshot: Whether it’s SpendSmart or some other prepaid debit card, weigh the costs against the services provided and decide on the best deal.”

    SpendSmart certainly hopes the Girl Scouts like the cards and the information they’re offering. The company hopes the deal with the Hornets’ Nest chapter is the first of many partnerships with the Girl Scouts.

  • The Occupy Card Moves Ahead

    The Occupy Card Moves Ahead

    The Occupy Money Cooperative needs to raise $900,000 to make its card a reality.

    by Chris Warren

    The Occupy Wall Street Movement’s first steps into the financial services industry have not been particularly smooth. The announcement this past summer that the Occupy Money Cooperative, an offshoot of the anti-status quo coalition that grabbed the world’s attention with its street protests and barbed criticism of banks in the fall of 2011, would attempt to issue a prepaid debit card was an immediate source of fascination.

    Yet when the proposed fees associated with the Occupy Card were unveiled in September, an avalanche of criticism quickly followed. Far from being hailed as a savior riding to the rescue of helpless citizens being preyed upon by the big banks, respected observers like Consumer Reports declared that the card’s fees were worse than many other products already on the market. “Our first look at those proposed fees shows that the Occupy Card needs some work if its sponsors truly want it to be superior to other prepaid cards,” declared the Consumer Reports review.

    Nevertheless, the supporters of the Occupy Money Cooperative appear just as determined as ever to not only launch its prepaid debit card but to revolutionize the banking system. According to an article in the Cornell Daily Sun, the student newspaper at Ithaca, New York’s Cornell University, university professor Robert Hockett is among those working to make the card a reality.

    According to the article by reporter, Helen Donnelly, the Occupy Card will be launched once Hockett and the other co-founders of the Occupy Money Cooperative can raise $900,000 in initial operating capital. The article does not say how close, or far, the group is from reaching that amount.

    Despite its bumpy rollout, Cornell’s Hockett insists that Occupy’s ambitions are still to go well beyond just a prepaid debit card. “The Occupy Money Cooperative is beginning with the debit card. This debit card is a specific counterpart to cards like these that exist in existing banking institutions already offered. Chase Liquid is probably the best-known example,” Hockett told the newspaper. “The ultimate plan is to offer all the other services that these existing banking institutions already do, but on a non-profit basis.”

     

  • Hispanic Consumers Propel Prepaid Card Growth

    Hispanic Consumers Propel Prepaid Card Growth

    Hispanic consumers account for a growing segment of prepaid debit card users.

    by Lucy Lazarony

    Hispanic consumers have embraced prepaid debit cards. According to an August 2012 research study, “Consumer Payments in the U.S.: The Latino Market” by Packaged Facts:

    • There are 4.6 million Latinos who used a prepaid debit card in the last 12 months.
    • They make up 15 percent of all consumers using prepaid debit cards.
    • Between 2011 and 2012, the number of Latinos using prepaid debit cards increased by 7.2 percent from 4.3 million to 4.6 million.
    • It is projected that by 2017 the percentage of Latinos using prepaid cards will increase from 13.8 percent to 16.0 percent and the number of Latinos depending on prepaid debit cards will grow from 4.6 million to 6.3 million for cumulative growth of 35.8 percent.

    The principal source of primary data for the study is the Winter 2012 Experian Simmons National Consumer Study, which was fielded between February 2011 and March 2012.

    Prepaid debit cards targeting Hispanic consumers include the Univision MasterCard prepaid card and The Coopera Card, available through credit unions.

    Miriam De Dios, Chief Executive Officer of Coopera, says prepaid debit cards are good payment options for Hispanic consumers for several reasons.

    “A prepaid reloadable card provides safety, access to new payment methods, can serve as an alternative to check-cashing, buying money orders and using money transfers for the financially excluded and it can be a way to reduce payroll costs for small businesses,” De Dios explains. “However, this product needs to be culturally relevant to Hispanic cardholders and it needs to be a stepping stone into other financial products and services that can help consumers achieve their financial goals. Therefore, credit unions are well suited to offer this product as well as financial education, loans, etc. to help the consumer with more.”

    Likes and dislikes

    According to De Dios, the features of prepaid debit cards that Hispanics like most include being able to open the card without needing a credit history, being able to use the card internationally, and being able to obtain secondary cards for family abroad, and having cardholder support available and accessible in English and Spanish.

    Text message alerts, convenient loading options, and low fees are also popular with Hispanic consumers, De Dios says.

    Turnoffs for Hispanic prepaid debit card users include inconsistent Spanish availability of services and features and too many restrictions to open and obtain a card, De Dios explains.

    Des Moines Metro Credit Union has been offering The Coopera Card since January 2012. The bilingual support (phone and website) is great for our members,” says Traci Stiles, business development manager at Des Moines Metro Credit Union. “They also like the ability to load money from their account over the phone or in person at the credit union. They like to use the card for everyday purchases and online purchases. Also, they use it to pay bills.”

    Forging bonds

    Many Coopera Card users have other services at the credit union as well, Stiles says.  “I think most of our members who have a Coopera Card also have other services with us. We have a Credit Builder Loan that is very popular. Also, many people leave some money in their account for savings,” Stiles says.

    One of the aims of The Coopera Card is to build new financial relationships with Hispanic consumers, De Dios says.

    “We work with credit union issuers across the country and they are integrating this product with their overall product suite and promoting it locally through Spanish media, in an outreach capacity through financial educational opportunities and through partners. Credit unions are also including this in their toolkit as they build relationships with employers with a large number of Hispanic employees and Hispanic-owned businesses.”

  • The Debate Over Green Dot

    The Debate Over Green Dot




    Analysts disagree about how much longtime prepaid debit card supplier Green Dot should worry about new competitors

    By Shane Tripcony

    Recently, (Green Dot Corporation- click for our review of their prepaid card) has been a source of debate and disagreement. A longtime issuer of prepaid debit cards, Monrovia, California-based Green Dot, is an established player in the industry, selling Visa and MasterCard branded prepaid cards both online and at tens of thousands of retail locations. In its most recent quarterly earnings report this past July, Green Dot not only declared that both its net income and revenue were 4 percent higher than the year before, but it also raised its full-year guidance.

    Not everyone is as rosy about Green Dot’s position in the prepaid industry. In mid-October, the company’s stock price took a tumble after Janney Capital Markets’ analyst, Thomas McCrohan, issued a client note (http://www.businessweek.com/ap/2013-10-16/analyst-cuts-green-dot-to-sell-on-competition) downgrading his rating of Green Dot from “Neutral” to “Sell.” McCrohan’s dimmed view on Green Dot’s fortunes were due to what he saw as stiffening competition from big financial players like American Express. In particular, McCrohan cited the low (or non-existent) reload fees available with cards such as AmEx’s Serve and newly introduced cards from retailers like Walgreen’s.




    In McCrohan’s analysis, Green Dot’s Wal-Mart MoneyCard, which has a $3 reload fee, doesn’t stack up well. “Paying a fee to reload cash onto a card is an irritant to most consumers, and retailers are beginning to turn to zero-fee reloads as a tool to drive foot traffic,” McCrohan wrote in his note to clients.

    McCrohan’s comments about Green Dot came during a stretch in which the company’s shares slid to three months’ low. Not everyone seems to share McCrohan’s dour view on Green Dot. On October 29, Piper Jaffray analyst, Michael Grondahl, (http://www.businessweek.com/ap/2013-10-29/green-dot-climbs-as-analyst-raises-rating)elevated his rating of the company from “Neutral” to “Overweight.” Grondahl said that the impact of increased competition on Green Dot’s business health was being overstated. He also noted that Wal-Mart is not pressuring the company to reduce fees on its card and is instead offering a larger selection of Green Dot cards.

    McCrohan, Grondahl and other observers of the quickly expanding prepaid industry will be able to quibble all the more soon. On October 31, Green Dot is set to (http://ir.greendot.com/phoenix.zhtml?c=235286&p=irol-newsArticle&ID=1865243&highlight=”) announce its third quarter financial results.

Prepaid Debit Card Reviews, Complaints, Etc