The Office of the Comptroller of the Currency, a federal bank regulator, determined that prepaid card issuer Urban Trust Bank and payday lender CheckSmart Inc. evaded state payday and usury laws in Arizona and Ohio by loading payday loans on prepaid cards. The OCC said Orlando, Fla.-based UTB agreed to correct the violations, submit to an audit of its prepaid card program, and submit to an OCC review of the bank's business plan to address deficiencies in its oversight of CheckSmart.
In May 2012, a coalition of consumer advocacy groups led by The National Consumer Law Center urged the OCC to shut down CheckSmart's payday loan program. The program was facilitated with UTB-issued Insight prepaid cards and managed by Insight Card Services LLC, which is partly owned by Dublin, Ohio-based Community Choice Financial Inc. The coalition said CheckSmart, a subsidiary of CCFI, used the Insight prepaid cards to provide payday loans in Arizona and Ohio, where the usury limits are 36 percent and 28 percent respectively.
The OCC said CheckSmart disguised payday loans as either lines of credit or overdraft protection on prepaid cards. "The loans cost $14 to $15 per $100 borrowed, or an annual rate of about 400 percent, but the costs were cloaked in various fees designed to evade state laws," according to the OCC.
The enforcement arm of the Federal Communications Commission proposed that prepaid calling card provider NobelTel LLC pay $5 million for deceptively marketing prepaid calling cards to consumers. The FCC said NobelTel's cards did not provide the calling minutes advertised and that fee disclosures lacked clarity.
The FCC's Enforcement Bureau said a NobelTel calling card that cost $2 and offered 400 calling minutes to Mexico could be exhausted after one 10-minute call, with the rest of the minutes drained by "daily" and "hang-up" fees assessed after the call was completed. Additionally, fee disclosures contained in the card advertising appeared in small type and were unclear about when fees would apply, according to the FCC.
"The only possible way consumers might be able to make calls of 400 minutes was if they made a single call of that length – almost seven hours," the FCC said.
As the U.S. Department of the Treasury pushes to get all Social Security recipients on some method of digital disbursement by March 2013, a new scam involving Social Security payments and prepaid cards was disclosed at a congressional hearing. Fraudsters are reportedly obtaining the account details of Social Security recipients, including people who opt to have funds loaded on Direct Express prepaid cards, and then direct depositing payments to other bank accounts or onto other prepaid cards.
"Widespread schemes" involved fraudsters calling or emailing targeted senior citizens to obtain personal information, which they then used to change account details and redirect funds, according to Social Security Administration Inspector General Patrick P. O'Carroll Jr. in testimony before the U.S. House of Representative's House Ways and Means Committee, Social Security Subcommittee, on Sept. 12, 2012.
The Doorways to Dreams Fund and the Center for Financial Services Innovation unveiled the Financial Capability Development Competition, designed to spur innovation in financial service products for the financially underserved. FinCapDev is calling for mobile application developers to submit proposals for products that will encourage positive financial choices and behaviors. For ore information about the challenge, go to fincapdev.com.
The Financial Crimes Enforcement Network (FinCEN) held a webinar to educate the financial services industry on how to fill out and submit suspicious activity reports designed to help law enforcement combat money laundering and other crimes. The recorded version of the webinar, as well as presentation materials, are available at treas.yorkcast.com/webcast/Viewer/?peid=2f93fd0fe8344ca98fe6b45c9ac312191d.
Green Dot Corp. launched its "Break Free" national TV advertising campaign. The 30-second spot showcases singer/songwriter and "The Voice" contestant, Pamela Rose Rodriquez, singing an original song that "conveys the feelings of financial control and confidence that cardholders experience with Green Dot," according to the company.
Prepaid card distributor InComm commenced its annual Dreams and Drywall Sweepstakes, through which winners of the grand prize and second place will receive $15,000 and $10,000, respectively, in gift cards from The Home Depot USA Inc. The sweepstakes runs through Nov. 2, 2012.
Additionally, InComm celebrated its 20th anniversary. Since its inception in 1992, the Atlanta-based company has grown its footprint to include 26 countries on five continents. Through its distribution of the closed-loop gift cards of over 500 retailers, InComm reportedly reaches more than 1 billion gift card buyers weekly.
A MasterCard Worldwide report suggests that financial inclusion initiatives worldwide would be more effective if payment products followed a path of progression, from offering basic services to more advanced options over time. The card brand believes the most basic functionality for financial products should begin with bill payment, then move to more complex services, such as credit issuance, savings accounts and insurance plans.
The report, entitled A New Perspective on Bill Payment—A Demand-Based Path to Financial Inclusion, said, "Bill payment is one of the most foundational/basic financial needs because it generally represents the essential living expenses of consumers, payments that every household has to make to survive."
Free-to-play online game developer Nexon Corp. said it donated $250,000 to charity: water, a Rwandan nonprofit organization. When gamers redeemed the value loaded on Nexon's Karma Koin prepaid game cards to enhance free-to-play games, 1 percent of each transaction was collected by Nexon for donation. Charity: water, which provides clean drinking water to developing countries, is the first nonprofit Nexon has donated to via Karma Koin proceeds.
The Prepaid International Forum marked five years of operation at a prepaid card summit in England's southeastern county of Sussex. PIF Chairman Robert Courtneidge said the PIF is helping the global prepaid card industry develop stronger business models in an increasingly intrusive regulatory environment.
Tax refund service provider Atlas Financial Services and prepaid card program manager Futura Card Services rolled out the Refund Access Prepaid MasterCard. Taxpayers are alerted when funds are deposited to the prepaid card via text message.
International payroll card manager Payoneer Inc. partnered with Victoria, British Columbia, Canada-based digital marketing services company Neverblue to provide Neverblue's clients with a prepaid payment option. Payoneer reportedly supports transactions at points of sale and ATMs in over 200 countries.
Singapore-based mobile financial services provider Utiba Mobility Inc. joined with prepaid processor i2c Inc. to develop mobile financial services in the Americas. Utiba expects to have broad coverage in the Americas by the end of 2013, serving a potential market of over 600 million mobile and Internet users in a combined population of over 900 million.
TransCard LLC, a provider of prepaid products to financial institutions (FIs), named Cathy Corby Parker to the position of Chief Revenue Officer. Parker, the founder and former President of prepaid industry consultancy Corby & Co. Inc., is tasked with furthering TransCard's FI and channel partnerships.
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