Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

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Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

Metabank is a component of this Ventra system partnership that is public-private

Beyond the each and every day issues plaguing the Ventra rollout lies a possibly more troubling reality: The banking partner selected within the Ventra system seemingly have a long reputation for legal issues regarding previous involvement in prepaid debit schemes along with other tasks.

The partnership that is public-private up to operate Ventra includes (at the very least) four entities aside from the CTA: First information, Cubic Transportation Systems, Mastercard and Metabank.

Metabank, element of keeping business Meta Financial Group, Inc., had been selected by Cubic being a partner within the prepaid debit card part of this system, based on the CTA. Located in Storm Lake, Ia., Metabank ended up being as soon as referred to as First Midwest Financial and it has always been taking part in producing and running electronic repayment systems such as prepaid debit card programs, in component through its Metapay subsidiary.


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Nevertheless, Metabank has skilled a few appropriate and problems that are ethical 2004. A few of these dilemmas are associated with dilemmas such as for example fraudulence, participating in misleading company methods when you look at the lending that is subprime and in addition directly associated with running a prepaid debit card system similar to Ventra.

A quick writeup on Metabank’s publicly-available appropriate history programs:

  • In 2004, the Sioux Falls class District filed suit alleging that MetaBank improperly permitted funds which belonged to your college region become deposited into, and later withdrawn from, an account that is corporate by a member of staff for the college region.
  • In 2007, MetaBank had been sued together with a roster of participating banks for supplying a few loans and personal lines of credit to car dealerships running underneath the J.D. Byrider brand name, accused in days gone by of predatory financing methods when you look at the subprime auto market. It absolutely was alleged MetaBank “participated within the fraudulent scheme” by virtue of providing these personal lines of credit and loans despite being conscious of the predatory customer methods associated with the dealerships, and that MetaBank profited by getting undisclosed “special advantages” for providing these loans.
  • Each of wire fraud, making a false statement in a bank’s books or records, money laundering and aggravated identity theft in 2009, a Metabank employee embezzled more than $4 million by selling false certificates of deposit (CDs) and was sentenced to seven years in a federal prison after pleading guilty to one count. Metabank had been later sued by other banking institutions for too little direction over its workers as well as for refusing to provide the funds back.
  • This season, a well known loan that is short-term produced by Meta Financial Group called iAdvance ended up being halted by the workplace of Thrift Supervision associated with the Securities and Exchange Commission due to alleged unjust or misleading functions or techniques in violation of Section 5 associated with the Federal Trade Commission Act in addition to OTS Advertising Regulations. MetaBank decided to spend $5.2 million in restitution and fines throughout the scheduled system, which offered payday and income income tax reimbursement loans by means of prepaid debit cards. At that time, Metabank had been prohibitied from entering into “any new alternative party relationship agreements concerning any credit item, deposit item (including prepaid access), or teller machine” that is automatic.
  • This year, Metabank’s particpation in a favorite system which marketed prepaid reloadable debit cards to primarily underbanked consumers called NetSpend developed dilemmas for NetSpend’s IPO because of Metabank’s past issues with any office of Thrift Supervision. The OTS had directed MetaBank, had given about 71 % of NetSpend’s prepaid cards, to have approval for entering home based business partnerships or materially amending current people. The OTS regualtory action on Metabank ended up being applauded by customer advocate teams.
  • Last year, Metabank had been tangled up in a lawsuit alleging something special card granted by Metabank charged a person $15 to utilize the card, despite having a stability of $17.71 left regarding the card for acquisitions. The suit alleged breach of agreement and “deceptive, deceptive, and conduct” that is fraudulent.

Most of that leads to a different key concern: that which was the choice procedure the CTA found in choosing its lovers when it comes to Ventra system, and just just what requirements ended up being utilized in determing Metabank’s skills? Aswell, exactly exactly exactly what oversight existed within the development for the Ventra that is entire system?

In the event that Chicago City Council chooses to go ahead and hold hearings over issues with the rollout associated with Ventra system, as some aldermen wish to accomplish, there’s apt to be a complete number of concerns the council people can ask of officials they call to testify.

Here’s another place that is good begin.

To some extent One of Ward Room’s series on feasible City Council hearings on Ventra issues, we looked over the good explanations why CTA joined into a partnership with personal businesses for Ventra. To some extent Two, we examined means Ventra’s banking partner may be profiting from costs.

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