Apply for a prepaid debit card, the company advertised, and approval is guarantee. Use the card the same day, it said; your money will always be available.
But what NetSpend didn't tell customers was that once money was loaded onto their cards, they may not be able to access it for days or even weeks, the Federal Trade Commission alleged.
On Friday, the company -- an affiliate of Georgia-based TSYS, or Total System Services -- agreed to settle the FTC's complaint, which was filed in U.S. District Court for the Northern District of Georgia. In the settlement, the company agreed to provide no less than $53 million in relief, consisting of $40 million on deposit in customer accounts and fees of $13 million.
The company is required to notify customers covered by the settlement. Court documents show that the company must provide refunds to affected customers who request their money back.
FTC approved the settlement on a 2-1 vote, with the dissenting vote cast by the commissioner appointed by President Trump to serve as acting chair.
But the FTC complaint said that besides deceiving people about access to their funds, the company misrepresented what would happen when card-holders disputed charges, and that it forced customers who closed accounts and requested refunds to wait weeks to get their money.
In settling the case, NetSpend didn't admit or deny any of the FTC's allegations.
The settlement bars the company from advertising, marketing, promoting or selling any prepaid product by misrepresenting key details about the time or conditions to use the card. The company, acquired by Columbus-based TSYS in 2013, also is barred from misrepresenting facts about the protections consumers have in the event of account errors.
In her dissent to the settlement, FTC acting chair Maureen Ohlhausen wrote that she believed the overwhelming majority of consumers received their funds on their NetSpend cards before or on the date they were made available for transfer. Many of these were paycheck funds, she said.
The FTC, Ohlhausen said, "misses the mark in deceptive advertising enforcement..." with the settlement.
But Commissioner Terrell McSweeny, an Obama-appointee, said that NetSpend's advertising made explicit claims that consumers would be able to use their cards immediately and have instant access to their funds with no waiting. "These claims were not limited to situations involving direct deposit," she wrote.
Some customers, she wrote, had to wait weeks before their accounts were activated. During the interim, they did not have access to money loaded or deposited onto their cards. The FTC complaint alleged that NetSpend did not activate accounts for many consumers even after they provided additional information or documentation that NetSpend requested to verify their identity.
The other vote in favor of the settlement came from former chairwoman Edith Ramirez. Her vote came before she left the commission in February. News reports have said that the Trump administration urged Ramirez to leave.
There are three vacancies on the five-member commission, with only Democrat McSweeny and Republican Ohlhausen on the governing body.