WASHINGTON — Federal authorities say they have shut down what they have called a "scam" in the issuing and sale of prepaid cards.
The Federal Trade Commission has petitioned and received from the U.S. District Court for the Central District of California a temporary restraining order and asset freeze against four companies and two individuals in the prepaid card business.
The agency charged the company's have been debiting consumers' checking and other accounts without notice and or permission in connection with their cards. Among the debits the agency charged had taken place included a $159 application fee.
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The agency also charged that the Web sites the companies used to market the cards said things like "no annual fee" and failed to disclose the $159 fee. All the cards the agency said were involved in the alleged wrongdoing carried the Visa or MasterCard brand.
The temporary restraining order, which also enjoined the destruction of records as well as freezing assets, did not identify which financial institutions were used as a source for the branded cards.
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