Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

Ventra Prepaid Banking Partner Has Long Reputation For Legal Difficulty

Metabank is a component associated with the Ventra system partnership that is public-private

Beyond the each and every day dilemmas plaguing the Ventra rollout lies a possibly more fact that is troubling The banking partner plumped for included in the Ventra system seemingly have an extended reputation for appropriate dilemmas linked to previous involvement in prepaid debit schemes as well as 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 holding business Meta Financial Group, Inc., ended up being selected by Cubic being a partner within the debit that is prepaid percentage of this program, in accordance with the CTA. Situated in Storm Lake, Ia., Metabank ended up being when referred to as First Midwest Financial and it has for ages been involved with producing and running electronic repayment systems such as prepaid debit card programs, in component through its Metapay subsidiary.


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But, Metabank has skilled a few appropriate and ethical issues since 2004. Some of those dilemmas are associated with problems such as for example fraudulence, participating in misleading company techniques when you look at the subprime lending market and in addition directly pertaining to running a prepaid debit card system similar to Ventra.

A short report 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MetaBank improperly permitted funds which belonged towards the college region become deposited into, and afterwards withdrawn from, an account that is corporate by a member of staff of the college region.
  • In 2007, MetaBank had been sued along 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 the last of predatory financing techniques into the auto market that is subprime. It absolutely was alleged MetaBank “participated into the fraudulent scheme” by virtue of providing these personal lines of credit and loans despite being conscious of the predatory customer methods associated with dealerships, and therefore MetaBank profited by getting undisclosed “special advantages” for providing these loans.
  • During read this article 2009, a Metabank worker embezzled more than $4 million by offering false certificates of deposit (CDs) and had been sentenced to seven years in a federal jail after pleading bad to 1 count all of cable fraudulence, making a false declaration in a bank’s publications or documents, cash laundering and aggravated identification theft. Metabank had been later sued by other banking institutions for too little direction over its employees as well as for refusing to provide the cash right right back.
  • This season, a well known loan that is short-term produced by Meta Financial Group called iAdvance ended up being halted because of the workplace of Thrift Supervision of this Securities and Exchange Commission due to alleged unfair or misleading functions or methods in violation of Section 5 of this Federal Trade Commission Act plus the OTS Advertising Regulations. MetaBank consented to pay $5.2 million in restitution and fines on the scheduled system, which offered payday and 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 season, Metabank’s particpation in a program that is popular marketed prepaid reloadable debit cards to primarily underbanked customers called NetSpend developed issues for NetSpend’s IPO because of Metabank’s past issues with any office of Thrift Supervision. The OTS had directed MetaBank, had released about 71 per cent of NetSpend’s prepaid cards, to have approval for entering business that is new 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 associated with a lawsuit alleging something special card given by Metabank charged a person $15 to make use of the card, despite having a stability of $17.71 kept from the card for acquisitions. The suit alleged breach of agreement and “deceptive, deceptive, and fraudulent conduct”.

Every one of leading to a different key concern: that which was the choice procedure the CTA utilized in picking its lovers for the Ventra system, and just just just just what requirements had been found in determing Metabank’s skills? Too, just what oversight existed throughout the development of this Ventra that is entire system?

The council members can ask of officials they call to testify if the Chicago City Council decides to go ahead and hold hearings over problems with the rollout of the Ventra program, as some aldermen want to do, there’s likely to be a whole series of questions.

Here’s another place that is good begin.

In role One of Ward Room’s series on feasible City Council hearings on Ventra dilemmas, we looked over the factors why CTA entered in to a partnership with personal businesses for Ventra. In role Two, we examined ways Ventra’s banking partner might be profiting from fees.