June 20, 2012
I was wrong. I thought that using the NetSpend card for normal everyday purchases would be safe (see “NetSpend challenges the throne”). However, I tried to log into my account Tuesday evening and found “We’re sorry, there is a problem with your account”:
Uh oh. I knew from readers that this meant my account had been closed. I thought back to things I’ve done with the card in the past week. It was all miscellaneous small purchases. I bought pet food. I paid for movie tickets. I bought a few groceries. What could they have objected to? I didn’t take money out via an ATM. I didn’t pay any bills. I didn’t make any large purchases. I didn’t buy money orders or gift cards.
Was it my blog post? In that post, I recommended that people use the card as it is intended to be used. Did they read the post and see something they didn’t like?
I called the number on the screen and had an entertaining conversation. It went like this:
NetSpend: Mr Miler your account is already closed. You are no longer eligible for NetSpend services.
Me: Why?
NetSpend: Due to a bank request. The only reason we close an account is due to a bank request.
Me: Why did a bank request that my account be closed?
NetSpend: We don’t have that information. We are not the ones that closed the account. We have a department that is constantly monitoring accounts. We work hand in hand with with banks in monitoring accounts.
Me: What bank are you talking about? I didn’t do anything with my NetSpend card that had anything to do with any of my banks.
NetSpend: It was a previous bank, not NetSpend. They requested that the account be closed due to suspicious activity. We’re not even supposed to tell you that, but you asked.
Me: What activity was suspicious?
NetSpend: We do not have that information.
During this conversation, I racked my brain trying to think of what bank could have even known I had a NetSpend card. Finally, the fog lifted in my brain. I remembered that NetSpend cards are issued by a bank called Metabank…
Me: Is the bank you’re talking about, Metabank?
NetSpend: [long pause] Yes
I tried mightily to get more information, but to no avail. I spoke to a supervisor who gave me the same non-answers. I asked who else I could speak with that could give me more information. “No one.” Could I speak with the risk management team? “No. You can call back during business hours and ask for a supervisor and ask the supervisor to speak with the risk management team.” Great. Can I speak with the marketing department? “We don’t have one.” Can I speak with the sales department? “We don’t have one… I mean we do have a marketing and sales department, but we don’t have a number for customers to call.” And on and on it went.
While I couldn’t get any information about why I was shut down, I did get some information about what happens next. I was told that I would be sent a check in 20 business days. When I asked about a fee, the supervisor confirmed that there would be a $5.95 fee. I asked that it be waived, but he said that all he could do is make a note in my account to ask. I also asked about the $20 referrals. He said that once they’re paid they would go into my account and then I can request a check again. I’ll believe that when I see it.
Reader experiences
Hopefully others will have better luck than I had. If not, maybe this will work out as a nice, one time only, cash-out of Vanilla Reload cards. We could do worse.
Next steps
I’ll run out soon to get a Mio card if I can find one. Unfortunately, you can’t order them online without first buying one in-store. Also, of course, I’ll watch eagerly for the new OneVanilla card, coming soon.
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How can something this even exist with a Mastercard logo on it? You follow their rules and they shut you down and hold your money for 20 days? I’d make my call to, if it matters, Mastercard – they allowed their logo on the damn thing. Forget abuse, this is just short of criminal.
If it is this likely to get shutdown, I would take it for all it’s worth. Load up 15k over two days. On the 3rd day, cash out 2 $7500 money orders, and load up 7500 again immediately, then cash out to a 3rd money order. Could get this done within a 15 minutes on the 3rd day. Repeat until account closure. If they close your account before you can get it out, you will still get the money back in 20 days.
@jcmitchell21: This tactics may get you in trouble with Chase which is much worse.
I am sorry that this happened but I am also glad that you made the attempt and let us know how it went in the process. I really appreciate the transparency and candid way you are willing to take the plunge into a new idea that might benefit many of us out here. You provide a service that most of us I am sure appreciate. Thanks.
@namtuge, not so fast. I think mitchell’s idea has merit. The keys to diversify you spend to a bunch of cards including 1X cards. I was thinking about hammering my Amex Delta, Amex gold, Sapphire, and SPG and spread the love around! Biggest danger is they shut you down before you use the Vanilla card, but the good news is you have Amex as a backup.
How much did you load on the card? I think these cards are not marketed to high spenders so loading several thousand dollars may make the bank nervous. It’s also possible they didn’t like all the referral credits you were generating.
Since none of your spend was out of the ordinary, I would suspect it was your referral link (and their generous $40 payout)that got you flagged, even if only 50 people signed up via your link. That $2K in under 24 hours. You actual # was probably substantially more. Would be interesting to see how other readers fare since most would have limited referral credits. Though question is can you open another account and try again after you get all your money back?
I’ve already told you they are crooked. DO NOT load 7,500 on you card unless you are interested in having it frozen. It had nothing to do with his referral links and everything to do with a crooked company.
FM- Dont bother with the MIO card. Same routine shut down with in 2 weeks. Checks take 4-6 weeks to send out minus a processing fee.
FF, thank you so much always for your important and extraordinary posts. Your site is the best of all points and miles..
What did you expect? How many of your accounts need to be shut down before you learn to keep your mouth shut?
I guarantee you it was the referral link. You’re probably one of the few customers who made that much in referrals and they traced it to the blog.
It is well documented credit cards are heavily regulated. These prepaid cards, none. They can do as they please unfortunately. At least for now. Let’s see how long things stay that way.
I read over the Mio card’s T&Cs and was not impressed. Let us know if you find different results.
Sorry to hear that. FM
A lot of balance remaining?
If you loaded more than $2500 in one day or (I think) $10,000 in one week, you have violated the Patriot Act and the bank is required by law to shut you down and report you to the Department of Treasury & Secret Service. Under the Act, it is also a violation of the Act to tell you why you were shut down or that you have been reported to those agencies. So that could all explain NetrSpend’s secrecy. Them saying that your activity is suspicious leads me to believe this is what happened.
Bummer, so did you lose all your referrals?
Ah, sorry, missed the last sentence. I wonder if they track who you referred…
I was doing this method month before FM was and was shut down in a similar fashion. It has nothing to do with the referral link or someones mythical idea of 2,500 in one day or 10k in a month.
I wonder what you folks think about Mango card. Is it a good alternative?
@Vadzim,
Looked at Mango, and did not see either of the two things I want to see:
1. A way to load from office supply stores.
2. A debit card capability. (At least not mentioned on the site)
so if you are going to only get 1x, I would not get unless you know something I don’t. I am on flytertalk if you want to sent a PM.
@BE.RGHT.BACK, can you expand on what it is?
[...] you were thinking of using the netSpend Mastercard prepaid card, you might want to read this post of the Frequent Miler’s about account closures. Tread carefully with this [...]
@BE.RGHT.BACK – The $2500/day is no mythical idea, I can assure you. It is in fact federal law enacted under The Patriot Act’s provisions for money laundering and suspicious banking activity monitoring. It may not be the reason your account was closed, but it is the reason many pre-paid accounts are closed every single day in this country. And under new rules, starting July 1, doing business using pre-paid cards, money orders, etc is going to much more strict! Expect more accounts to be closed much faster and more people to start getting phone calls and interview requests from DHS & OIG.
Awww.. FM, sorry to hear that.
To me it is clear, ALL these preload cards are designed/targeted towards poor, ignorant b&s&&rds (no offense) and NOT for smart cookies like FM and others on this board. As soon as “metabanks” (name itself sounds shady) realize the customer might be smarter than their targeted IQ, they like to shut down the account it seems. Seriously, at some point these banks need to get whacked by somebody. As consumers we should not only boycott but also try to educate poor guys.
@USGovtAgent- could you expand on what these new rules eff 7/1 will be ?
Try buying beer, cigarettes, and scratch off cards at 7-11. Your account probably won’t get shut down.
MKHFNR: I agree. NetSpend is a shady business.
jcmitchell21: You might want to wait and see if we really get those checks that were promised.
namtuge: Good point
chuck: Thanks!
THEsocalledfan: Yep
Smitty06: I think I loaded $500 initially and then $1500 more a day or two later. That was over a week ago. I’m not sure why they would have waited so long to flag me for that. Referrals, yes, that’s possible.
Steven C: Yes, it could be the referrals. I don’t know how many I have, nor can I check since I can’t log on. I don’t plan to try again with NetSpend. Prepaid cards are thriving and I expect to see more and more options soon.
BE.RIGHT.BACK: I agree, they are crooked. Thanks for the MIO warning. Maybe I’ll give that a pass after all…
emily: Wow, thanks!
WakeUp: Apparently more than 1
rick: Could be. That seems plausible.
Mark: True, that’s why these cards are so profitable.
harvson3: Thanks for the MIO info. I might hold off on that for now.
Mark: About $1500 balance remaining.
HockeyCoachBen: I didn’t load more than $2K. Can you point me to the regulation you’re talking about?
HikerT: Yeah, I feel bad about the possibility of them shutting down people I referred. Let’s hope not!
USGovtAgent: Can you point me to this law with the $2500 limit? I’d like to read up…
vr: Yep, cards like this are definitely designed to take advantage of people who don’t know better.
netspend card: LOL
Looks like to stay under the radar, don’t load more than $1000/day and no more than maybe every 5-7 days. I’m going to attempt to pay my mortgage, condo association fees and utility bills with this. That alone, if it works, will add over $1k/mo in spending.
Btw, FM, if you look on the Reloadit page, there’s several other card partners they have who are not affiliated with Metabank. maybe you can try your luck again with less slower spending.
I would guess it was due to $20 referrals and the referring chain.. If A refers B, B refers C, C refers D… till Z, anyone in the referring chain got a problem, all other persons in the chain would be involved in.
USGovtSecretAgentMan. Love to see a link. I’ve done 1,000′s of transaction above $2,500 without any outside interest in me at all.
It’s $10k/day that gets reported to the IRS. That’s it. You do not get shut down, The Gov’t doesn’t come looking for you, your bank won’t cause you any problems, and the claims of $2,500 day are a load of crap.
Anyone who played the US Mint game heavily should know this.
beware of these kind of cards. the sponsor banks are all full of it and will cancel them quickly
i just used my amex hhilton card today to buy onevanilla prepaid visa card’s at cvs. trying to hit the 40K bonus but wondering if the 6x bonus points will be added as well. has anyone had any luck with using amex to buy prepaid visa cards for 6x points? thanks.
[...] We’re sorry, there is a problem with your account [...]
I received the payout check today from NetSpend. It took less than 2 weeks. Not bad!
Are you going to try again with one of the other similar cards?
Rick: yes, but I haven’t had a chance to yet.
SHUT DOWN! NetSpend just shut my account down. A little warning would have been nice. Oh well, it was good while it lasted….
I called customer service and they said the shutdown request was from MetaBank for “unintended usage” or something like that (forgot the exact wording).
Netspend also runs the PayPay prepaid card. Once you are shutdown on the NS card, you are also unable to open a PayPal account.
The law firm of M&S is investigating the prepaid debit card industry for unfair and deceptive acts and practices in the marketing and administration of their prepaid card products.
Everything you are doing is legal and is in compliance with the terms of the NS agreement. If your account has been locked or terminated, I encourge you to contact them at the following link:
http://www.findjustice.com/cases/consumer-protection/consumer-investigations/prepaid-debit-cards/
@Consumerist — stop spreading misinformation. PayPal card comes from a different bank than NS. The only affiliation they have is they accept reloads through the NS or Reload-it network.
If you’re smart about how you use them and don’t rush out to buy money orders, there won’t be any problems.
It looks like the Paypal card is backed by Bancorp (which backs the Mio) whereas Netspend is backed by Metabank
@Frequent Miler — got my PayPal card today and it looks very interesting.
Online interface is very similar to NS and when I searched for load locations, it shows the grocery chain where I was previously able to buy Reload-it cards, as well as OD stores, so I think it should accept Vanilla reloads as well.
It has a $4.95 monthly fee but all purchases are free, but otherwise it might work just as well as NS but with backing from Bancorp.
frequent churner: Thanks for the info! Others, here is the page to find the reload locations for the PayPal card: https://www.paypal-prepaid.com/account/distributors.m
No problem! I’m going to test it out and let you know if there’s any issues. I have a 5-card churn coming up with $17k minimum spend. These two cards should work nicely to help clear that.
Well, I had “problems” with my NS and Paypal account on the same day! What are the odds, I milked one of them for 3 months and over 12k, and now that I have both they get shut down on the same day. Paypal customer service told me friday the two companies aren’t related but looks like they might be.
Next up is to try and replicate this with Mio or similar cards.
…and there’s more, just got off the phone with the “helpful” CSR and they said it’s detected as “fraud” because the reload packs are marked as coming from a company in GA or CA, so they think someone in a different state is abusing my card.
Here’s the final update, I called PP and turns out they’re indeed run by NS. I escalated all the way to the compliance department and got it out of them that they simply didn’t like the large debit and bill payment transactions I’ve been making so they closed it.
The good news is it has nothing to do with the issuing bank. I called both banks and they said you can still open other cards that have them as the issuing bank.
A mix of regular spending and large debits is probably the best way to do this going forward.
frequent churner: thanks for the info. I’m amazed at the idea that NetSpend runs the PayPal prepaid card, but is backed by a different bank. Weird! Question: why do you think large debits would be successful at all? I’m assuming that the best someone can do is a mix of regular spending and small bill payments.
Can’t say exactly what’s going on behind the scenes, but after speaking with someone at Bancorp, things make more sense. The csr at the bank said they get a lot of complaints about random account closures like these (and not just from NS), and even set up a dedicated phone line just for that. I told him how NS was blaming “the bank” for the closure and he assured me it’s nothing of the sort.
When I was on the phone with the card CSR, first the lower level foreign grunts tried to lie to me and avoid the question of what’s wrong with the account, pretending like they didn’t hear me, and insisted on just sending me a check. After pressing the issue, they first lied that it was due to “out of state loads” that they think was fraudulent.
Finally, when I insisted to find out the real deal, I got transferred to a CSR at NS who was here in the US, and she straight up asked me why I have all these debits to various banks and only one or two purchases. Eventually she “politely” said that what I was doing wasn’t something they liked, even though it didn’t violate any of the terms.
I’m going to try out the other cards and see how they work, but without large load+debit use, they’re pretty useless to me. Maybe if I put more than one or two credit purchases on there it’ll go undetected or they’ll let it go. The good news is there’s so many of them you can keep signing up for more.
For clarification purposes, did paypal shut down their prepaid card at the time of the netspend card or did your actual paypal account get shut down?
Stevedealin: My paypal account is fine. It turns out the debit card had PayPal name on it just as a front, for marketing purposes. Both cards got shutdown the same day and the “compliance department” person for both was at NS.
It doesn’t matter now, I got my refund within a week and now have two replacement cards with which I’ll take a better approach that’ll hopefully be sustainable.
Thanks for the info frequent churner. I take it that “replacement”= different card or spouse?
Yes, different card, like the one FM got and some others , but none that are run by NS. This time I’ll try to feed the goose that lays the golden eggs by doing some regular CC transactions and mix in debit transactions to clear out extra “spending”. I’m thinking that if they’re making decent money from my CC spending they’ll look the other way on the withdrawals.
Good thing there’s so many of them and they all work the same, and I have a local grocery store that sells all kinds of non-vanilla reloads too.
[...] money through the card. I wrote about my own experience with getting shut down in the post “We’re sorry, there is a problem with your account.” I think that one could use the NetSpend card to make one or two tax payments before [...]
Just as a data-point…wanted to chime in if anyone else ever reads this blog.
Got my NS card about a month ago. Loaded it up with $2,000 using Vanilla since I had a few large purchases to make and they didn’t take Amex.
Tried to avoid putting any charges < $150 on it since there was a $1 fee for any purchase. Made a purchase at a restaurant, a hotel, car repair merchant. But no small purchases.
Spent down to about $1750 before I got the same warning on the website and when I called the CSR (clearly outsourced) was informed my account was shutdown. Didn't feel like arguing or complaining since I knew it would get me nowhere. Will pay the processing fee and get my balance back but it's annoying as I was about to pay my estimated taxes of around $7,000 on the card. Glad it was cancelled before I loaded it with $7,000.
Have a second NS card with a slightly different name that I never activated…am half tempted to try it to pay my $7,000 in taxes and then let it get shut down.
I think what these companies really want is for you to setup direct deposit with them and make lots of small purchases. There must be some processing fees they get charged with (so they need to recoup some with that $1 fee per transaction) OR perhaps they lose money on the actual card itself but use the direct deposits of people to maintain a somewhat large cash balance that they can use to invest before people do actually spend to eek out some sort of profit.
Has anybody actually set up direct deposit? If so, were you shutdown as well?
Also, has anybody opted to pay for their FeeAdvantage Plan? If so, were you shutdown as well?
@ Nate- if you are successful in activating a second card please share- I’m not sure it will work since you need a social or EIN to activate but if it does that sure would be some useful info.
Question:
Netspend has a bill pay function. Theoretically, that means you can buy vanilla reload cards at office depot at 5x points. Then load those onto netspend. Then use the bill pay function on netspend to pay the credit card bill.
Is this viable? Any risks associated? Just a late night thought….I don’t really have the guts to try it…It just seems too easy.
mp: It will work once or twice, but then NetSpend will close your account.
@ Nate – I just set up my NS for Direct Deposit recently. Had my employer do a small dd (less than 500) and funds loaded within 24 hours. However on payday (Friday) my DD (over 1500) still hasn’t hit my NS account (Sunday). Guessing it takes a full business day, but we’ll see.
[...] to rule them all,’ ‘NetSpend challenges the throne,’ and ‘We’re sorry, there is a problem with your account‘ for [...]
At least from what I’m reading, everyones money was returned to them in a check. It has been 10 months and I still am trying to find the $17,256 that was taken from my several different accounts associated with Metabank (which they had no problem issuing to me at the time).
2/28/13 NP card declined @ walmart. called cs was told card cancelled by the bank and refund would be issued in 20 days. done some research and found your site and call cs back, this time i was told card cancelled for some suspicious activity or some transfers. question will i really get my balanced refunded to me?
shoegal: Most people do get the checks. cathy’s comment (above) is the first I’ve heard where the check never appeared.
[...] While that doesn’t sound too bad, some users’ accounts have been on hold for a few weeks even when the MVD representatives told them it would only be a few days or one week. If this situation becomes similar to the Netspend prepaid card shutdowns, you’ll be in for a bit of a fight. You’ll get your money back, of course, but it might not be as quick as you hoped for (read about how Frequent Miler’s Netspend account was shut down). [...]
What do you think about accountnow?
I got the same crap about “suspicious activity” after loading the account then made one payment. When I asked them about what exactly is “suspicious activity”, I get the same “We don’t have any additional information.” It took them more than a month and several phone calls to finally get all my money back. Initially they were going to charge me for sending me a check after they closed my account (and not able to give me an answer). After the 20 days, I called again and they told me that there’ll be no fee since there was an error. Another 2 weeks went by before I finally for a check from these crooks!