MetaBank Collecting on Outstanding I-Advance Debts
MetaBank is wasting no time in attempting to collect on the outstanding balances on their now closed i-advance lines of credit.
How MetaBank would collect on the i-advances that were extended to existing customers has been a question ever since the OTS’ action against the thrift from Storm Lake. The Office of Thrift Supervision‘s October 12th Supervisory Directive forced MetaBank to close existing i-advance accounts. On its website, MetaBank acknowledged that it was not sure how well they would be able to pull back their loans.
MetaBank published an 8-K later that day which warned investors about the situation.
We cannot predict with assurance whether and to what extent the OTS will address the compliance and supervisory matters in addition to those described above. However, the OTS has informed us that it will address in the future its expectations with respect to reimbursement of borrowers under the iAdvance program. It is anticipated that the discontinuance of the iAdvance program and the potential discontinuance of the tax-related programs (which are subject to OTS approval) will eliminate a substantial portion of MPS’ gross profit. In addition, the discontinuance of the iAdvance program may result in elevated rates of nonpayment on outstanding iAdvance loans.
There is some important information here with respect to the ability of MetaBank to collect. For one, the statement hints that the OTS may itself decide to determine how and to what extent MetaBank can collect. Most importantly, it puts the cards on the table that the iAdvance balances are in jeopardy.
MetaBank’s cards used the expectation of a direct deposit to collateralize short-term advances. For each $20 increment, MetaBank charged a fee of $2.50. The consumer had until their next direct deposit (up to a maximum of 35 days) to pay it back. Otherwise, the money was deducted from the next direct deposit. Unstated but implicit to the arrangement was that a borrower could take out a new advance immediately if they could not extinguish all of the debt.
Re-upping is often referred to as a “roll-over.” MetaBank has told me that their customers cannot roll-over, but their assertion is based on a technicality. The direct deposit does satisfy the existing debt, but that claim ignores the instance of a new loan.
Now, the option of rolling over is gone. MetaBank can’t offer a new i-advance. If their non-rollover claim was true, there wouldn’t be a problem. Unfortunately for consumers and for MetaBank’s balance sheet, these customers were rolling over.
MetaBank’s response appears to be that they will take all of the outstanding debt at the next direct deposit.
A consumer advocate in Washington says that she has encountered a retired woman from Pennsylvania who claims that MetaBank plans to take at least a portion of the next direct deposit of her Social Security payment. According to the borrower, she took out an iAdvance for $300 in August. Since then, she has been covering that debt with a new advance. She now owes $320. MetaBank says that they will take it all at the end of this month.
There are a number of situations where this policy runs afoul of the law. For one, unless you are the Treasury Department or if you are trying to collect on child support, it is against the law to put a garnishment a Social Security check. There’s also the possibility that a judge would classify an i-advance from a prepaid card within the definition of a credit card. If that was the case, then a claim could be made that it is a violation of the Truth-in-Lending Act to put an offset on a credit card.
From my perspective, MetaBank deserves to collect on the principal that it’s iAdvance consumers have drawn from the company. The question is really about how they do it. Taking all of the money right away is certainly one way to jump start that process. At a time when regulators are watching so closely, it seems like a decision that puts money in conflict with prudence. An alternative plan would be to set up a payment plan. Illegal garnishment is just more blood in the water.
Filed under: unbanked | Tags: cash, i-advance, MetaBank, MetaPayment Systems, NetSpend, Office of Thrift Supervison
Tweets that mention MetaBank Collecting Outstanding I-Advances | Bank Talk -- Topsy.com
October 21, 2010
[...] This post was mentioned on Twitter by Justin Hosie, CRA-NC. CRA-NC said: MetaBank is Collecting on Outstanding I-Advances, garnishing SS may run afoul of the law. Stay Tuned | Bank Talk http://bit.ly/c1ztM7 [...]
mrnd5
October 29, 2010
Meta Bank has been caught practicing usury. Interest rates at 650% are illegal and immoral. What Meta Bank has been doing is considered illegal and you are still talking about how Meta Bank should still try to collect. Meta Bank should be punished for usury; Meta Bank has committed a crime. However this is only one of many of the kinds of crimes that Meta Bank has been opening committing. Some people should consider whether they have been complicit. Don't even think of the term "unbanked" or " underbanked" any more because this is bottom feeding at its lowest.
Usury, a dictionary definition shows that Meta Bank practiced usury openly for years « Mrnd5's Blog
October 29, 2010
[...] MetaBank Collecting on Outstanding I-Advance Debts October 21st, 2010 [...]
Scott Hankes
October 30, 2010
I need to know who to contact as MetaBank today garnished $540 from my Social Security Deposit for my loan payment in full after giving me little time to make alternate arrangements. I am now risking eviction and becoming homeless. Where can I get help now that i know what they did is highly illega
Carolyn
October 31, 2010
MetaBank, garnished my social security $737.00 until I am unable to pay rent. I will call ssI to see what can be done, I also, was not informed.
yolander
November 1, 2010
The OTS contacted me and ask me to call meta bank to see if they could work out a payment arrangement.. Unfortunately they would not but OTS asked me to inform them on the result of my attempt..Why im not sure but maybe something will be done about it.. I personally have taken it as a lesson learned.. Next time I should read ALL the fine print and research on it.
Adam R.
November 2, 2010
The OTS didn't say that MetaBank was practicing usury. Of course, they didn't refute that, either. They said that MetaBank was engaging in "unfair and deceptive" business practices. That should tell you that there is more to come on this story – and it probably isn't good for MetaBank. Hopefully, it will lead to remedies that help people.
sdoggie
November 2, 2010
It sounds as if you should contact the Office of Thrift Supervision. They are the people who supervise MetaBank, and they have the authority to correct a problem. Do you know how to get in contact with them? You should also consider an attorney.
Daniel
November 3, 2010
My Mother is on disability and got debited full payoff of 540.00 now has no money and is frantic….. What can be done, This is such a bad way to do business……. They give someone availibilty to funds that are on a fixed income and then take it back to leave them high and dry!!!!! How do I contact the Office of Thrify Supervision??? Who else to contact…….Thanks!
tkosbab
November 4, 2010
Stop the direct deposit to that card,,,,,tell Social Security you lost your card,,,,,,get one from walmart and start a new direct deposit with them. No way they can take your money then
tkosbab
November 4, 2010
That is what I did and as long as no money goes on netspend card they cant get it
mrnd5
November 5, 2010
The reason you need to keep the OTS informed is so that what happened to you at Meta Bank will not happen to another person. It is bad enough that what happened to you happened, but no one should have had that happen to them at all. Had only someone else complained earlier perhaps what happened to you would never have had to have happened at all through Meta Bank.
mrnd5
November 5, 2010
Who should I contact if I have a question about my savings association?
Contact the OTS Consumer Response Center to reach a dedicated consumer affairs specialist.
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Phone: 1 (800) 842-6929
TTY: 1 (800) 877-8339
Monday through Friday 8:00 a.m. – 5:30 p.m., Eastern Standard Time
Fax: (202) 906-7342
E-mail: consumer.complaint@ots.treas.gov
mrnd5
November 5, 2010
Who should I contact if I have a question about my savings association?
Contact the OTS Consumer Response Center to reach a dedicated consumer affairs specialist.
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Phone: 1 (800) 842-6929
TTY: 1 (800) 877-8339
Monday through Friday 8:00 a.m. – 5:30 p.m., Eastern Standard Time
Fax: (202) 906-7342
E-mail: consumer.complaint@ots.treas.gov
mrnd5
November 5, 2010
I agree that you must stop the direct deposit from your paycheck immediately. Talk to the personnel office at your place of employment in person so that this will be done immediately. Do not use Walmart. Do not use a debit card. Bank locally where you can speak to a real person. Meta Bank's fine print indicates that they retain the right to change the rules at any time without telling the customer. Please keep the OTS informed about how Meta Bank responds so that what happened to you will not happen to another person. Meta Bank tends to push blame always back onto the customer even when they are clearly at fault. Why? Anything to get money. They failed to properly load my prepaid travel card and blamed it on me. Even my efforts to get it properly reloaded failed which they also blamed on me or someone else. This happened to another traveler; Meta Bank told him that he had not used their card properly. This too was a lie, but why is Meta Bank covering up their actions with lies? It is apparent to me that Meta Bank simply needed free use of our money.
blackdia
November 6, 2010
I believe that people who have prepaid cards instead of an actual bank product usually have them due to mismanagement of money (I am guilty of that as well). I paid off my iadvance on the day they ceased the program and upset because no other entity offers such a program. So I have to manage my money better. Stop crying, if you borrowed the money pay it back. Never borrow more than you can afford to pay back.
lawrence
November 7, 2010
i agree 100% happened to me to but i borrowed it and it was not free money. everybody knew when they signed up they had to pay it back all at once so agree everyone needs to stop crying and pay back what was borrowed.
lawrence
November 7, 2010
it stated in the contract when you got your next deposit they would take it from your next deposit. it is not against the law what they are doing it stated it in the contract you signed online and majority of you that are crying need to grow up and be adults
latoya mcherrin
November 26, 2010
Ok people stop whining, u should never borrow money if u can’t at some point pay it back. Meta bank should’ve notified us, but we are all adulta and it was in the terms and service, when the money was to be debited
blackdia
November 27, 2010
That means that you did not save for " That something went wrong" situation. My guess is that you probably would have had the same something went wrong problem next time you had to payback. You relied on the program to much. It hurt my pocket as well, but I never borrowed more than I can payback the next week. It affected a lot of people but if you paid it back then that is the first step to building your credit so that you can one day open a real line of credit.
gravy
November 28, 2010
dont understand all the crying. i used the service and it was great. i borrowed money and repaid in full every time. will admit customer service wasn’t the greatest but hey the overall service was the best, if i need money it was there. i hate the fact they had to pull this cause of all the cry baby’s on here borrowing money and not being able to pay it back , and you blame this financial institution of your faults. so sad
Blah
January 3, 2011
I agree with Gravy. If you can’t pay back the loan amount at the next direct deposit, then don’t borrow the money! I used iAdvance 1 maybe 2 times a year. If I found a great deal on something I wanted, but didn’t want to wait another 2 weeks until payday and miss out on the deal. I would borrow $200 (or so) and simply cut $25 out of my 2 week budget to make up for the interest rate. For all the people that are trying to get their money back from your Social Security, give me a break. You borrowed money, and they took the amount back. Stop trying looking for a handout!
Steve
February 8, 2011
I agree with you both. The OTS stopped the advances and left you high and dry, otherwise, you would have taken another loan out. be mad at them not metabank, they were helping me build credit.
Ed DesRoches
February 16, 2011
Ok, look, Metabank is not "garnishing". The are taking the money back from the acct from where the loan was paid into. A true "garnish" is handled at the employer-level, not the direct deposit acct. As soon as funds are released to the Metabank acct, it's fair game immediately. Unless you can view a deduction on the payor's statement taken by Metabank, there is no attachment or garnishment.