InComm Faces Class-Action Lawsuit Over Prepaid Debit Cards

In the bustling world of financial technology, prepaid debit cards have become a popular alternative to traditional banking. However, not all experiences with these cards are positive, as Kevin Smith and others have alleged in a class-action lawsuit filed on September 12, 2023, in the United States District Court for the Northern District of California.

The suit, filed against InComm Financial Services, Inc., which does business as InComm Payments, and Pathward, N.A., alleges that consumers who purchased InComm's prepaid debit cards found them to be worth less than their face value, or even worthless. "Plaintiff purchased three gift cards from InComm, none of which functioned correctly," the lawsuit states. When Smith reached out to InComm's customer service for assistance, he found them unable to rectify the situation. This experience is not unique to Smith, as the lawsuit alleges similar experiences by other consumers.

The class-action suit represents all persons within the United States who purchased or are the current owners of InComm Prepaid Debit Cards and were blocked from using any portion of the funds on their cards.The lawsuit alleges violations of the California Consumer Legal Remedies Act (Cal. Civ. Code § 1750, et seq.) and the California Unfair Competition Law (Cal. Bus. & Prof. C. § 17200, et seq.). These laws are designed to protect consumers from deceptive business practices and unfair competition.

The California Consumer Legal Remedies Act, for instance, prohibits businesses from engaging in deceptive methods, acts, or practices in the conduct of any transaction intended to result in the sale or lease of goods or services to any consumer. The California Unfair Competition Law, on the other hand, prohibits any unlawful, unfair or fraudulent business act or practice.

In addition to these alleged violations, the lawsuit accuses the defendants of unjust enrichment, a legal principle that prevents one party from being unjustly enriched at the expense of another. "InComm sells prepaid debit cards, including non-reloadable and reloadable cards. Consumers have reported that their cards have no value or less than the face value," the lawsuit alleges.

The plaintiff seeks declaratory and injunctive relief, actual and statutory damages, punitive and exemplary damages, pre-and-post-judgment interest, attorneys' fees, and costs. While the exact amount of damages sought is not specified, the lawsuit makes it clear that the plaintiff believes the defendants have unjustly profited from their allegedly deceptive practices.

As the case progresses, it will be interesting to see how the court interprets and applies these consumer protection laws in the context of prepaid debit cards. The outcome could have significant implications for the fintech industry and consumers alike.