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PrePaid Debit Cards: A New Tool for Sports Recruiting

Adam Rust's picture

Posted July 23, 2010

A story out today in ESPN identifies the use of prepaid cards as an emerging enforcement problem. In some instances, less-than-scrupulous actors are willing to funnel cash to players through these cards.

Slightly different than a loan, these allow an agent to offer a constant stream of cash by giving a prospect or a prospect's family member a card with a cash value that can be constantly stuffed with more money, not unlike an actual bank account. The kicker: As of now, the NCAA has no way of tracking the transaction.

"That's the latest one I've heard,'' said one coach.

This is a new iteration on an old practice. Sports agents have been in trouble in the past when they have provided financial support to families.  The only difference is that then it was harder to cover things up. Witness what happened

to Reggie Bush. A spurned agent said that he paid the rent for Reggie Bush's family to live in a beautiful 3,000 square foot home in Spring Valley, California. The agent came clean because he wanted to get his money back, after Bush went ahead and signed with another marketing firm. USC was not directly implicated, but under NCAA rules, they were still punished. For the sake of this discussion, though, the role that USC is not important.  Nor is it that relevant that USC is giving back a copy of his Heisman to the Heisman Trust. (Trending up:Vince Young)

With prepaid cards, all of this might not have happened!

What is relevant is how these new cards have uses that are unusual, and that may not be readily expected for by regulators.

Giving a prepaid card to a parent speaks to a larger issue. Prepaid cards are hard to trace. It can be very difficult to figure out the identity of the re-loader.

Sports agents and coaches are innovative. Recent changes in communications (texting, Twitter, Facebook) continue to challenge the NCAA.

They are not alone, though. This spring, news came out that Payoneer cards, issued through MetaBank, were used by a team of assassins that took out a Hamas official in a hotel room in Dubai.

Both assassins and basketball players would be excluded from traditional perceptions of the makeup of typical "unbanked" or "underbanked" consumers.