On February 1, 2017, the Consumer Financial Protection Bureau (CFPB) announced a settlement with a credit card service provider and a credit card provider over a disruption of service for prepaid credit card consumers.
According to the CFPB, the credit card provider marketed its prepaid credit card to consumers nationally as a way to get direct deposits, including government benefits and payroll funds “up to two days sooner.” In October 2015, the credit card provider moved its prepaid card onto the service provider’s payment processing platform. At that time, there were approximately 652,000 prepaid card users, approximately 272,000 of whom received direct deposits and/or government benefits on their cards.
According to the CFPB, as a result of the move, 1,100 customers were unable to access their funds and 45,000 users’ payments and deposits did not go through. Additionally, the CFPB asserted that the consumers were given inaccurate information about their accounts and did not receive sufficient customer service. Because the service and credit card providers failed to test for these avoidable injuries, and because the move caused “substantial injury to consumers,” the CFPB claims that the providers violated sections 1031 and 1036(a)(1)(B) of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5563, 5565.
The service and credit card providers agreed to pay $10 million in restitution to consumers harmed by the move, as well as a $3 million fine to the CFPB Civil Penalty Fund. The providers also agreed to draw up a plan to prevent future services disruptions.