SiouxFalls, S.D.-based Meta FinancialGroup Inc. disclosed that it is facing a fifth class-action lawsuitover prepaid cards.
In2014 MetaBankdivision Meta Payment Systems entered into a multi-year agreement with UniRushLLC to issue the Prepaid RushCard. UniRush, Meta Financial and its unit bankwere named defendants in four class-action suits filed between Oct. 23, 2015,and Nov. 5, 2015, after customers were allegedly their prepaid RushCardcustomers for up to two weeks. The complaints allege breach of contract, fraud,misrepresentation and negligence, among other things.
MetaFinancial said in a quarterly filing that a fifth piece of class-actionlitigation was filed in federal district court on April 13 against the samedefendants.
Thecompany said the outcome of the legal proceedings is uncertain, but estimatesthat a reasonable possible loss could be as much as $100,000. Thecompany also noted that the OCC and ConsumerFinancial Protection Bureau are examining the alleged events.
Meta Financial also disclosed that it obtained a judgment of$6.1 million in January from a lawsuit it filed to collect on certaindelinquent loans made in connection with 2014 farming operations; the actionwas filed against C&B Farms LLC, Dakota River Farms LLC, Dakota Grain FarmsLLC, and Heather Swenson and Tracy Clement, who provided personal guaranties.The $6.1 million represents the full amount owed on the delinquent loans plusattorneys' fees, costs and post-judgment interest.
The quarterly filing also outlines MetaBank's ongoing dealings with certain corporate clientsof a firm called Springbok Services Inc. These clients purchased MetaBankprepaid reward cards from Springbok before the firm went bankrupt. Some ofthose reward cards were never activated or funded.
Meta Financial said counsel for these companies haveindicated that they are prepared to assert claims totaling about $1.5 millionagainst MetaBank based on principal/agency or failure to supervise theories.The company denies liability, but estimated a range of reasonably possible lossup to $300,000, unchanged from the estimate in its previous quarterly filing.