The FDIC announces settlements with banks in California and Texas for unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act (Section 5) and violations of the Treasury Rule, 31 C.F.R. § 210, governing the use of the Automated Clearing House system to deliver federal benefit payments to prepaid debit cards. Under the settlements, the entities have agreed to a Consent Order, Order for Restitution, and an Order to Pay Civil Money Penalty.
The FDIC determined that the banks engaged in unfair and deceptive practices in violation of Section 5 in the marketing and servicing of a prepaid, reloadable MasterCard. A number of the representations and omissions on the company’s websites were deceptive, such as advertising free online bill pay, promoting certain features and services of the card that were not available to cardholders, and charging fees that were not clearly disclosed.
Read More: FDIC Press Release