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 Ventra system public-private partnership

Beyond the every day dilemmas plaguing the Ventra rollout lies a possibly more troubling reality: The banking partner opted for included in the Ventra system seems to have a lengthy 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 very least) four entities aside from the CTA: First information, Cubic Transportation techniques, Mastercard and Metabank.

Metabank, section of keeping business Meta Financial Group, Inc., ended up being plumped for by Cubic as a partner when you look at the prepaid debit card percentage of this system, in line with the CTA. Situated in Storm Lake, Ia., Metabank ended up being when called First Midwest Financial and it has for ages been involved with producing and running electronic repayment systems such as prepaid debit card programs, to some extent through its Metapay subsidiary.


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Nevertheless, 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 methods into the subprime lending market and in addition directly pertaining to running a prepaid debit card system similar to Ventra.

A quick article 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that MetaBank improperly permitted funds which belonged towards the school region become deposited into, and later withdrawn from, a business account founded by a member of staff of this college region.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 number of loans and credit lines to car dealerships running beneath the J.D. Byrider brand name, accused in the last of predatory financing methods within the subprime auto market. 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 practices associated with the dealerships, and therefore MetaBank profited by getting undisclosed “special advantages” for providing these loans.
  • During 2009, a Metabank worker embezzled more than $4 million by attempting to sell false certificates of deposit (CDs) and ended up being sentenced to seven years in a federal jail after pleading accountable to 1 count all of cable fraudulence, building a false declaration in a bank’s publications or documents, money laundering and aggravated identification theft. Metabank had been afterwards sued by other banking institutions for deficiencies in direction over its employees as well as for refusing to offer the funds right right straight right back.
  • This year, a well known loan that is short-term developed by Meta Financial Group called iAdvance ended up being halted because of the Office of Thrift Supervision of this Securities and Exchange Commission due to alleged unjust or misleading functions or techniques in violation of Section 5 associated with Federal Trade Commission Act therefore the OTS Advertising Regulations. MetaBank decided to spend $5.2 million in restitution and fines on the system, which offered payday and tax reimbursement loans by means of prepaid debit cards. During the time, Metabank had been prohibitied from entering into “any new 3rd 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 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 granted 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 had been applauded by customer advocate teams.
  • Last year, Metabank ended up being tangled up in a lawsuit alleging a present card granted by Metabank charged a person $15 to utilize the card, despite having a stability of $17.71 kept regarding the card for acquisitions. The suit alleged breach of agreement and “deceptive, deceptive, and fraudulent conduct”.

Each of that leads to a different question that is key that which was the choice procedure the CTA found in choosing its lovers for the Ventra system, and just exactly exactly what requirements had been found in determing Metabank’s skills? too, exactly exactly just just what oversight existed throughout the creation for the Ventra that is entire system?

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

Here’s another great place to begin.

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


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