CFPB Reports an Increase in Complaints Relating to Prepaid Financial Products
As more consumers turn to prepaid financial products, the number of complaints is also seeing an increase.
In its monthly complaint snapshot, the Consumer Financial Protection Bureau (CFPB) reports a spike in the number of complaints about prepaid products as an increased number of customers found themselves frozen out of their accounts.
Prepaid products, like prepaid debit cards, are one of the fasted growing types of financial products in the country. These are often used as an alternative for consumers who may have trouble gaining access to a traditional checking account. Funds are loaded onto the card by a customer or a third party and can be used to make payments, store funds, withdraw cash, receive direct deposits and send money to other customers.
A majority of the complaints, says the CFPB, are related to Empowerment Ventures, the parent company of Rush Card.
As of February 1, 2016, the CFPB handled 4,300 prepaid product complaints.
Many consumers complained that they were unable to access funds loaded onto their prepaid cards for an extended period of time. Additionally, customers who wanted to dispute a charge saw their entire balance frozen while the company reviewed the claim.
If their prepaid card expired, the company often refused to re-issue a card with the remaining balance on the original card.
Users also got hit with a wide variety of charges including monthly, inactivity, transaction, balance inquiry, PIN change, and overdraft fees.
Overall, the CFPB reported in January about 811,700 complaints, an 8 percent increase in complaint volume between December 2015 and January 2016.
The entire complaint report can be found here.