Two U.S Senators are demanding answers from one of the largest prepaid card providers in the market, Monrovia-based Green Dot Corp., after its Wal-Mart branded card experienced outages last month, affecting many of its customers’ ability to check their account balances online and use their cards to make purchases.
Two members of the Senate Banking Committee, Sen. Sherrod Brown (D-Ohio) and Sen. Robert Menendez (D-New Jersey) sent a letter to Steven Streit, Green Dot’s president and chief executive requesting information on exactly how many people were affected by the lapse in service, a specific timeline of outages, the company’s plans to address consumer harms, and its timetable for providing further information to the Consumer Financial Protection Bureau.
The same letter was sent to Douglas McMillon, chief executive of Wal-Mart Stores Inc., the company whose Wal-Mart MoneyCard is issued by Green Dot and uses MasterCard’s payment processing platform.
A similar letter was sent to Ajay Banga, MasterCard’s chief executive. According to a May 18 statement issued by Green Dot on Twitter, the service interruptions first occurred as the result of a slowdown in transaction processing by its payment processor
The Senators’ letter cited a similar 2015 outage involving RushCard that left its consumers without access to paychecks for over two weeks. The card provider, whose customer base represents only a fraction of Green Dot’s at approximately half a million, reached a settlement with its customers agreeing to pay cardholders hurt by the outage up to $19 million.
“As with RushCard, many customers that use Green Dot are underserved by the financial system. Green Dot markets itself as focusing on the unbanked, underbanked, and unhappily banked, those new to banking, and millennials,” the letter reads. “A large proportion of unbanked households rely on prepaid cards for the same purposes that households associate with checking accounts: to pay for everyday purchases or bills and to receive paychecks.”
Typically, people who purchase prepaid cards are lower income individuals with less access to additional funds that could be used in an emergency, such as a credit card or separate bank account. Outages such as this one can leave many users unable to pay for necessities such as groceries, gas and rent.
“If you’re operating close to the edge from a financial perspective, any delay in receiving or paying your bills can seriously disrupt your life,” said John Thompson, senior vice president of the Center for Financial Services and Innovation, a Chicago nonprofit that studies consumer health.
The primary regulator of Green Dot, The Federal Reserve Bank declined to say whether they were officially looking into Green Dot’s outages.
