Wednesday, March 30, 2011
Bank Freedom to leave MetaBank
Prepaid Card Holdings Inc. subsidiary Bank Freedom reported it is phasing out its relationship with Financial Group Inc. subsidiary and prepaid card issuer MetaBank. Bank Freedom said it recently informed MetaBank that it contracted with a new bank to issue its Bank Freedom Prepaid Cards. MetaBank recently informed Bank Freedom that it would not renew its existing agreement, which expires November 2011.
"In 2010 we switched processors to reduce our processing costs," stated Bruce Berman, Chief Executive Officer of Bank Freedom. "Our business model since inception has been to offer consumers innovative prepaid card programs with low pricing and robust features. By switching issuing banks we can further reduce our cardholder fees without decreasing our profit margins."
Bank Freedom said it will begin issuing its prepaid cards through a new bank in May or June 2011 and will end its ties to MetaBank by November.
In late 2010, Netspend Holdings Inc. and Payment Data Systems Inc. announced they would stop using MetaBank as their card issuer. MetaBank's troubles began in October 2010 when the Office of Thrift Supervision, a federal bank regulator, ordered MetaBank to discontinue its iAdvance small-dollar loan program because it engaged in "unfair or deceptive acts or practices," according to a Securities and Exchange Commission filing.
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