Tuesday, June 11, 2013
On May 31, 2013, the Federal Deposit Insurance Corp. reported its settlement with a California bank and a Texas prepaid card marketer over alleged unfair and deceptive practices in the use of the automated clearing house system to deliver federal benefit payments to prepaid debit cards. First California Bank in Westlake Village, Calif., and Achieve Financial Services LLP in Austin, Texas, agreed to pay approximately $1.1 million to over 64,000 cardholders and to pay civil money penalties of $600,000 and $110,000, respectively.
The FDIC said the companies misrepresented to consumers the features of the FCB-issued, Achieve-managed, MasterCard Worldwide-branded AchieveCard. "A number of the representations and omissions on Achieve's website were deceptive, such as advertising free online bill pay, promoting certain features and services of the AchieveCard that were not available to cardholders, and charging fees that were not clearly disclosed," the FDIC said.
Additionally, Achieve's error resolution procedures imposed further, undisclosed requirements on cardholders, according to the FDIC. The agency noted that Achieve agreed to provide restitution to all affected consumers, with FCB liable for any unpaid restitution or other obligations unfulfilled by Achieve. The violations allegedly took place between April 2011 and January 2013.
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