META BANK will provide $4.8 million in restitution for i-advance consumers.

Find other ways to pay, like by using cash,

rather than by using PrePaid Debit Cards

– Don’t give up control of your own money

MetaBank Reports Cost of OTS Order

July 19th, 2011

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MetaBank says that the Office of Thrift Supervision’s cease and desist order against the Iowa thrift resulted in an after-tax loss of $3.4 million.
MetaBank was cited for a number of significant legal problems.
The OTS said that MetaBank had engaged in unfair and deceptive practices in its i-advance credit program. The i-advance offered credit to holders of certain MetaBank-issued debit cards.
When consumers established a direct deposit on their debit card, they were able to add the i-advance.
The i-advance charges $2.50 for each $20 loan increment.
The advances had a term of no more than 35 days.
The civil money penalty is part of a package of terms to the agreement between MetaBank and the OTS that was announced on July 15th. There terms state that:
  • The bank will cease to do anything that would violate the law or the regulations outlined in the OTS’ April report.
  • The bank will provide $4.8 million in restitution for i-advance consumers.(Not what it says on their website.)
  • The bank cannot offer an i-advance product with OTS approval.
  • The bank cannot originate refund anticipation loans or refund anticipation checks with OTS approval.
  • The bank cannot enter into third-party relationships to do either a credit-on-debit product, a RAL or RAC, or a new debit card with OTS approval.
  • The bank has to submit a report to the OTS about its third party relationships. If they cannot demonstrate that they are satisfactory to the OTS, then the OTS may require that they are terminated.
  • Neither the bank nor its third-party partners can use advertising to deceive the public.
  • No golden parachutes until the bank has cleared things up with the OTS.
  • The bank needs the approval (the “non-objection”) of the OTS Regional Director in order to issue dividends, pay interest on outstanding debt, or buy back stock.

(The problem may be that META BANK is so corrupt in their thought process, the thought process that allowed them to grow and to flourish as a subprime lender that they may not even understand how they are deceiving the general public.)

Shares in MetaBank are up slightly today, which may reflect the coat-tails of the larger market or a positive judgement from investors. Sometimes the announcement of a civil money penalty becomes the basis for a gain, because the penalty amount may be lower than the price that investors had written in to the existing valuation.

Some of these terms are not very significant, but others will be painful.

The ability to receive a dividend was one of the best reasons to own MetaBank shares. The shares had been paying 52 cents each, which amounted to slightly less than 3 percent at today’s price. For now, the dividend is probably safe.

The OTS has taken the option of holding back a dividend, but they have not promised to do so.

A more important issue is the opportunity for MetaBank to establish relationships with new sales organizations for prepaid debit cards.

Meta has to satisfy the OTS before it can get new debit card business. This would seem to be the stick that gets MetaBank to move.

MetaBank has a significant relationship with AccountNow and with NetSpend, but the latter is trying to branch out beyond MetaBank and recently announced plans to do more with Bancorp Bank.

There are some good opportunities for growth in the prepaid sector.(For banks!!! Not for consumers!!!)

The Mango Card is issued by Horizon Bank and by Inter National Bank. As Mango grows, it would become an attractive partner for a debit card issuer.        http://banktalk.org/2011/07/19/metabank-reports-cost-of-ots-order/#more-3815

No Prepaid Bank Card will ever be able to get my endorsement given my experience using META BANK. What do we really know about Horizon Bank or about Inter National Bank and the MANGO CARD???

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