It looks as if thousands of former I-Advance customers are getting restitution payments this week.

In July, MetaBank announced that it had agreed with the OTS to provide approximately $4.8 million in restitution payments to its former i-advance customers.

The payments are being delivered through direct deposit on to MetaBank-issued prepaid cards. (more…)

The Office of the Comptroller of the Currency (OCC) issued a proposed rule that will allow credit products to return to debit cards.

I have suspected that the credit issue was far from resolved. The Office of Thrift Supervision (OTS) issued a directive last fall that forced MetaBank to pull its i-advance product. I-advance was a short-term credit product offered to customers that attached a regular direct deposit to their debit cards. The costs were (more…)

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 (more…)

The success of NetSpend‘s IPO, with shares finding a price of $11, has now been echoed and perhaps even amplified by the subsequent demand for those shares during the first two days of their trading on the open NASDAQ.

NetSpend’s success illustrates an important lesson. Companies can still be very profitable without offering high-cost credit. There are tens of millions of unbanked households. They need some access to the payments system. Warren Buffet would love this business, because it comes with a good moat and because there are plenty of untapped consumers. Offering them a debit card is enough.

NetSpend wanted to get between $10 and $12 for their shares. On Monday, they got $11 per share, without the i-advance. Two days later, (more…)

The SEC published an 8-K last night, revealing the Supervisory Directive from the Office of Thrift Supervision that forces MetaBank’s MetaPayment Systems division from offering refund anticipation loans, refund anticipation checks, and the i-advance line of credit.

I asked a spokesperson at MPS if MetaBank had a response for the Directive.

“We’re still in the business of prepaid cards,” he said, “but with regard to the payday product, it comes down to that the OTS, which is our bank regulator, says that we have to suspend it.”

There are three elements to the directive. The OTS says that MetaBank has to obtain written approval from a (more…)