NORTH TEXAS (CBSDFW.COM) – A North Texas father is furious after he says a pre-paid debit card company targeted his teenage son.
“I didn’t even know it was legal for credit card companies to solicit minors like that,” said Paul Albrecht about the time his 17-year-old son received the card in the mail.
The pre-paid card was from the company Netspend.
“I thought it was spam at first… was kind of confused why the bank would send me a card I didn’t apply for,” said Paul’s son, Matthew Albrecht. “I didn’t even know it was a thing. I thought it would be like a debit card.”
But pre-paid debit cards are different. They are not secured credit cards. Marketed as a credit card with training wheels, there are no overdrafts, no impact on credit scores and they’re easy to reload.
“It did have a lot of information about direct deposit and several different methods for students or kids to put paychecks in for direct deposit,” said Paul Albrecht.
But Paul was upset his son was sent the card in the first place – especially after reading the fine print.
“This is where I noticed the fees, the fees are really, really high,” he said.
According to the fee schedule it costs $1 to use the card if you sign for it like a credit card. The cost is $2 if you use your pin for purchases, $.50 to check the balance and $5.95 a month even if you don’t use it at all.
“They are going to be charged $72 a year before they even use the thing,” said Albrecht.
Financial advisor Todd Mark with Navicore Solutions said companies that offer these pre-paid cards often target students or people who don’t have a bank account.
“Per the Credit Card Act anybody that’s under 21 would needs either proof of income or a co-signer to get them this,” said Mark.
And the pre-paid cards don’t fall under the credit card act.
“This is a unique new gray area when we are talking about pre-loaded money cards,” said Mark.
Mark said using one won’t help you build credit. Plus the fees aren’t worth it.
“There were a lot of fees which to me. If someone was just trying to use loaded card a gift card essentially…you’d be better off getting a general one with minimal fees,” said Mark.
Netspend told CBS11, “We do everything we can to make sure we don’t send card offers to anyone under 18. If someone under 18 attempts to activate a card with us, we require a parent to serve as the primary cardholder and will not activate a card otherwise.”
The company sent the following statement:
Offers and accompanying disclosures are sent in compliance with the Electronic Fund Transfer Act as implemented through Regulation E (12 CFR 1005.5(b)). Social Security numbers and dates of birth are not provided and are not connected to an offer in any way. Offers are not activated and cannot be activated without the recipient’s request to do so, and only after full verification of the recipient’s identity and legal age. The offer is NOT a credit card, it contains no value, and it cannot be used to conduct transactions. No credit report has been or will be obtained in connection with the offer, and the offer does not have any effect on the recipient’s credit.
NetSpend relies on affiliate marketing services as a source for reaching potential new customers and offer recipients’ information is acquired through these business relationships. A consumer’s name and address is provided to the affiliate marketing service when the consumer opts in to receive offers and marketing materials from the third party, as well as any third party with whom they may share the information. Because NetSpend feels strongly about customer privacy, we only contract with marketing affiliates that have collected the information from willing consumers that indicate they are at least 18 years of age, and have received permission to share it with us.
Steps are taken through the identification process to further ensure that a person under 18 cannot activate the offer. The offer cannot be used unless activated. During activation NetSpend verifies the identity of the person activating the offer to ensure that it can only be used by the intended recipient and that the person activating the offer is at least 18 years of age. If the recipient’s identity cannot be verified or they are under 18, the activation attempt is rejected.
Put simply, we do everything we can to make sure we don’t send card offers to anyone under 18. If someone under 18 attempts to activate a card with us, we require a parent to serve as the primary cardholder and will not activate a card otherwise.
Mr. Albrecht’s son:
Our agreement with the website is to only accept customer information from website users who are 18 or over. We are consistently improving our processes for verifying the age and identity of anyone receiving a NetSpend offer.
We have explained to Mr. Albrecht’s how his son’s information came to our company and assured him that at no time did we have an open account in his son’s name. We removed Mr. Albrecht’s son from our mailing list and shared information with Mr. Albrecht on how he can opt out of other third-party contact that might be generated from the website that was the source of his information.
Mr. Albrecht told our staff today that he appreciated our explanation and follow-up. We always appreciated inquiries that can help us improve our processes.