NetSpend Corp. reached an agreement with the Federal Trade Commission to resolve allegations over deceptive marketing.
The FTC had filed a complaint against the Total System Services Inc. unit charging it with deceiving consumers about access to funds deposited on NetSpend debit cards. The FTC said NetSpend's marketing messages did not clearly communicate the company's obligations to verify consumers' identities before activating their accounts. NetSpend responded with a motion to dismiss the complaint in December 2016.
NetSpend said it did not admit any wrongdoing but it "agreed to settle in order to avoid the significant costs associated with protracted litigation."
The settlement applies to some individuals who purchased Netspend prepaid cards between Jan. 1, 2010, and Aug. 31, 2016, but never completed the required identity verification steps to activate the card.
The company has agreed to continue to assist these individuals in accessing their funds, which totaled nearly $40 million. About $3.6 million of the $40 million has been accessed by cardholders since Sept. 1, 2016. Netspend will refund $13 million in fees charged prior to Aug. 31, 2016, and refund any fees charged to inactivated accounts after that date.