Green Dot Pulling MoneyPak
Loadable debit card set to phase out first quarter of 2015
PASADENA, Calif. -- In a decision based in part on concern over "victim-assisted" fraud, financial services company Green Dot has opted to discontinue its MoneyPak loadable debit-card product.
Noting the decision in a statement to a U.S. Senate hearing on fraud committed against the elderly last month, the Pasadena, Calif.-based company said it would "sunset" the product as of early in first-quarter 2015.
On the company's quarterly investor's call in late July, Green Dot founder, CEO and president Steven Streit said that the "benefit" of getting rid of MoneyPak is twofold: First, moving to reloading debit-card products at the register via card swipe (Green Dot's newest option) is a "more intuitive customer behavior, easier to teach for the new customer, easier to train for the cashier."
Second, "it really completely eliminates the opportunity for this third-party victim-assisted fraud, which I'm sure you've read about in the news quite a bit, has been a real challenge for us with that MoneyPak product," Streit said.
He called the entire fraud issue--which has been reported in news articles and blogs from Wyoming to New York--"a shame because it's a teeny tiny. If you look at the nefarious … use of the MoneyPak product, it's a tiny piece of that product, maybe less than 1% or 0.5% of all transactions."
But in terms of people affected, "it's just too much to deal with and so the answer is get rid of the product, get rid of that fraud and push all reloads to strictly swipe."
The company's "SwIT" or swipe interface technology first debuted at Bentonville, Ark.-based Walmart about a year ago, and since then, Green Dot has moved quickly to remove the original MoneyPak product out of all Walmarts and a couple of dollar-store retailers.
Originally, customers bought a MoneyPak product, which came with a personal identification number or PIN. They would use that number to go online and load the money onto a prepaid card.
Scammers would call unsuspecting targets, convince them they were officials with the Internal Revenue Service (IRS) or some other organization and get them to buy a MoneyPak product for a set dollar amount. Then the criminal would ask the victim for the PIN number and drain the account.
Ultimately, dropping MoneyPak will benefit Green Dot, Streit said. "It will save expenses; it will cut down on a lot of refunds and other things we've done to try to make customers whole," he said. "We'll protect our brand and our brand image, and we'll also facilitate a way easier and more logical method of reloading for our prepaid cardholders."
Green Dot Corp. is a bank holding company that owns Green Dot Bank, a state member bank located in Provo, Utah. It is regulated by the Board of Governors of the Federal Reserve System and the State of Utah Department of Financial Institutions. The company has more than 600 domestic employees and offices in Pasadena, Calif.; Palo Alto, Calif.; Bentonville, Ark.; and Provo, Utah.