Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

Metabank is component associated with Ventra system public-private partnership

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

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

Metabank, element of keeping business Meta Financial Group, Inc., ended up being selected by Cubic as being a partner when you look at the debit that is prepaid part of this system, in line with the CTA. Situated in Storm Lake, Ia., Metabank had been as soon as called First Midwest Financial and it has always been associated with producing and running electronic repayment systems such as prepaid debit card programs, to some extent through its Metapay subsidiary.


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But, Metabank has skilled a number of appropriate and ethical dilemmas since 2004. Many of these issues are associated with dilemmas such as for example fraudulence, participating in misleading business techniques into the lending that is subprime as well as directly regarding running a prepaid debit card system similar to Ventra.

A short writeup on Metabank’s publicly-available history that is legal:

  • In 2004, the Sioux Falls class District filed suit alleging that MetaBank improperly permitted funds which belonged towards the college region become deposited into, and afterwards withdrawn from, a business account founded by a member of staff of this college region.
  • In 2007, MetaBank ended up being sued along with a roster of participating banks for supplying a few loans and credit lines to car dealerships running beneath the J.D. Byrider brand name, accused in days gone by of predatory financing methods when you look at the auto market that is subprime. It absolutely was alleged MetaBank “participated within the fraudulent scheme” by virtue of supplying these personal lines of credit and loans despite being conscious of the predatory customer methods associated with the dealerships, and therefore 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 ended up being later sued by other banking institutions for too little direction over its workers as well as for refusing to offer the amount of money straight straight back.
  • This season, a well known short-term loan item developed by Meta Financial Group called iAdvance had been halted by the workplace of Thrift Supervision for the Securities and Exchange Commission due to alleged unjust or misleading acts or techniques in violation of Section 5 associated with Federal Trade Commission Act and also the OTS Advertising Regulations. MetaBank consented to spend $5.2 million in restitution and fines on the scheduled program, which offered payday and tax reimbursement loans in the shape of prepaid debit cards. During the time, Metabank ended up being prohibitied from entering into “any new alternative party relationship agreements concerning any credit item, deposit item (including prepaid access), or automated teller machine”.
  • This season, Metabank’s particpation in a favorite system which marketed prepaid reloadable debit cards to primarily underbanked customers called NetSpend developed dilemmas for NetSpend’s IPO because of Metabank’s past difficulties with any office of Thrift Supervision. The OTS had directed MetaBank, had released about 71 per cent of NetSpend’s prepaid cards, to acquire 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 ended up being involved with a lawsuit alleging a present card released by Metabank charged a person $15 to make use of the card, despite having a stability of $17.71 kept on the card for acquisitions. The suit alleged breach of contract and “deceptive, deceptive, and fraudulent conduct”.

Each of that leads to some other question that is key that which was the choice procedure the CTA utilized in choosing its partners when it comes to Ventra system, and just just just just what requirements had been found in determing Metabank’s skills? also, exactly just what oversight existed throughout the creation associated with Ventra that is entire system?

In the event that Chicago City Council chooses to go right ahead and hold hearings over difficulties with the rollout of this Ventra system, as some aldermen might like to do, there’s apt to be a complete a number of concerns the council users can ask of officials they call to testify.

Here’s another great place to begin.

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

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