Marchbooks' Blog

June 27, 2010

More Questionable Banking Practices

Filed under: Comments from our Authors — marchbooks @ 6:53 pm

Someone needs to put a stop to the borderline criminal business practices of banks selling prepaid credit cards. Some of these cards charge userous monthly fees, have unreasonably short terms before they expire or unfairly require sensitive personal information in order to activate them (like this company – Netspend). These cards target poor people who cannot qualify for traditional cards.

But, the essence of this problem is this – these cards are PREPAID and should be treated with the same latitude as cash. These banks accept money up front. I dare not even venture a guess at how much of this money is STOLEN by these banks, not only in up front and continuing maintainance charges, but in dollars for cards that they just refuse to honor (at their own whim).

I cannot think of a SINGLE argument that would justify requiring sensitive personal information like social security numbers or birthdates to activate a PREPAID card such as this. These banks are not extending credit. They are taking people’s money (which they proceed to invest and profit off of) and issuing a plastic card allowing the user to spend that money which has already been paid up front. Identity theft is a reality. Encouraging people (oftentimes people with limited resources) to part with their sensitive information, before they will be allowed to access money that they have already ponied up and which is earning dividends for the bank which is not acting as a lender but only a bookkeeper, is wrong. Preventing them access to this money for failure to provide this information is criminal.

It is no wonder that banks are held in such low regard by today’s taxpayers. With practices like this, they are one step away from the crook on the street.

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