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Customers say Walmart-brand prepaid debit cards aren’t working, cutting off access to funds

Green Dot headquarters
Users of Walmart MoneyCard prepaid debit cards, issued by Pasadena’s Green Dot Corp., say they can’t check their balances, make purchases or get cash.
(Gina Ferazzi / Los Angeles Times)

For the last three days, users of Walmart-brand prepaid debit cards say they’ve been unable to withdraw cash from ATMs, check their account balances or make purchases, leaving them cut off from their money.

Customers say the problems started early Monday and still hadn’t been fixed as of Wednesday afternoon. Though it’s not clear how widespread the problems are, the complaints are reminiscent of an outage at prepaid firm RushCard that last year left thousands of customers in the lurch.

Green Dot Corp., the Pasadena company that issues Walmart’s MoneyCard prepaid debit cards, said a technical problem is preventing customers from being able to check their balances online or over the phone, an issue that should be fixed by Wednesday night. 

Green Dot Chief Executive Steve Streit said card users should be able to make purchases, get cash and pay bills as usual.

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“It only affects the ability to get your balance,” Streit said. “The ability for a customer to spend money using their card or withdraw money from an ATM is not impacted. All cards are working normally.”

As evidence of that, he said the company has not seen any notable change in the number of payments and ATM transactions processed over the last few days. "I think it’s working properly,” he said.

Walmart did not respond to a request for comment.

But customers said the problems go well beyond balance inquiries.

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Over the last few days, MoneyCard users have taken to social media to complain that they can’t make purchases or get cash from ATMs, in addition to not being able to make balance inquiries -- a crucial feature for the millions of low-income Americans who rely on prepaid debit cards to manage their money.

Joseph Charafi, a Las Vegas filmmaker, said his card was declined a few times on Monday. He went online to check his balance but wasn’t able to log in to his account. 

“I had to call my mom and have her wire me money to pay for my kid’s food and put gas in my car,” Charafi said. “It’s a huge inconvenience.”

Jackie Hickman, a bookkeeper in Murrieta, said she tried to use her MoneyCard to buy gas on each of the last two days and was declined both times. She’s not even trying to make purchases with the card anymore, instead relying on what little cash she has on hand.

“It’s embarrassing when it keeps getting declined and you know there’s money there,” she said.

Takisa Watkins, a Detroit security guard, said her card was declined at stores and ATMs on Monday and Tuesday. She was able to make a small purchase at a 7-Eleven on Wednesday, but she still can’t get cash from an ATM.

That’s a big problem for Watkins, who said she typically pays her rent in cash and is now past due.

“I can’t get cash off the card, and I can’t verify how much cash is on the card,” she said. “The late fees are adding up. It’s not the landlord’s fault I can’t pay, but it’s not my fault either.”

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Though some MoneyCard customers also have bank accounts and use their prepaid cards primarily for day-to-day purchases, many other users get paid and store larger sums on the card.

Watkins, the security guard, said her paychecks are deposited automatically to her MoneyCard account. She’s now asked her supervisor to cancel the next deposit, fearing she won’t be able to spend her paycheck if she continues to have problems with MoneyCard.

“I probably won’t be using it again,” she said.

By Wednesday morning, more than 200 people had joined a Facebook group called Walmart MoneyCard Exodus, but it’s not clear how many MoneyCard customers might be affected.

Last year, thousands of RushCard prepaid card users lost access to their accounts, some for more than a week. Customers later sued the card issuer, which was founded by hip-hop mogul Russell Simmons and marketed its card to minorities. Last week, the company agreed to pay $19 million to as many as 300,000 customers to settle the case.

There’s no indication that problems at Green Dot are that widespread, but even small-scale outages can turn into big problems for prepaid card companies and their customers.

Ben Jackson, a prepaid industry analyst at Mercator Advisory Group, said outages are no more common among prepaid debit card companies than among banks or credit card issuers. But because prepaid customers often have no other payment options, outages are especially harmful.

“How many credit cards does someone have in their wallet? If one doesn’t work, you use another,” Jackson said. “If that’s your only card, it becomes a much bigger issue. The disruption is greater for people who have less access.”

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Any widespread outage could also cut into a debit card issuer’s revenue, since Green Dot and other issuers receive a small fee when customers load cash onto cards or make purchases, he said.

For Green Dot, the Walmart MoneyCard is a particularly vital product line. In June, a day after Green Dot announced it had extended its contract to issue the Walmart MoneyCard through at least 2020, the company’s shares jumped 41%. 

Between MoneyCard and other Green Dot products sold at Walmart, the retail giant accounts for nearly half of Green Dot’s annual sales, according to securities filings. The company issues its own Green Dot-brand prepaid cards and offers checking accounts through its subsidiary GoBank.

Green Dot reporting having 4.5 million active cards at the end of last year.

The complaints also come at an awkward time for the company, one of the largest prepaid debit card issuers and a pioneer in the industry. It was founded in 1999 by Streit and went public in 2010.

However, customer growth has slowed the last few years, and shares are well below their all-time high of about $63 in 2011. Shares closed up 1% on Wednesday to $23.49.

At Green Dot’s annual shareholder meeting next week, San Francisco hedge fund Harvest Capital plans to ask shareholders to elect three new board members to replace Streit and two other longtime Green Dot directors. 

Harvest in January sent a letter to Green Dot, saying Streit needs to be replaced "due to his persistently poor performance, misleading and inconsistent investor communications and inability to deliver on promises to shareholders.”

Green Dot on Tuesday released a statement saying the company is “disappointed that Harvest continues to engage in a distracting and disruptive process.”

 

james.koren@latimes.com

Twitter: @jrkoren


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