Consumer complaint received 2022-12-14
Company: Netspend Corporation
State: KY
Product: Credit card or prepaid card
Sub-product: General-purpose prepaid card
Issue: Problem with a purchase or transfer
Sub-issue: Card company isn't resolving a dispute about a purchase or transfer

Complaint:
I live in XXXX, KY I have a PayPal Prepaid Mastercard ( " Card '' ) On XX/XX/2022 I attempted to take a withdrawal of cash from the balance on my Card and received an insufficient balance message. I called the number on the back of the Card to check my balance and learned, for the first time, that my account balance had been depleted to negative {$2.00}. I then attempted to review prior transactions using the phone system, but it would only let me go back nine transactions. Next, I tried to log on to the account online but was not able to do so because I could not recall my correct password. I attempted to call PayPal to notify them about the fraud, but I could not get a live person on the phone. 
On XX/XX/2022, I called the number on the back the Card to report the fraudulent use of my Card and requested a list of transactions using my Card. I told the person that I did not lose my Card and did not know what happened. 
On or about XX/XX/2022, I received a letter from the PayPal Prepaid Mastercard Dispute Resolution Department dated XX/XX/2022 listing transactions on my Card from XX/XX/XXXX to XX/XX/2022 totaling {$3900.00} and informing me that they have determined that the transactions were valid. ( See Exhibit A. ) The letter did not explain why or how they reached that determination and advised that I could request copies of the documents they used reaching the final determination by contacting the PayPal Prepaid Mastercard Customer Service Department. I contacted them the same day by phone and requested the documentation. 
On or about XX/XX/2022, I received a letter from netSpend dated XX/XX/2022 in response to my request for the documents used to deny my claim. ( See Exhibit B. ) Attached to the letter is a list of the online account activity for my card for the relevant time frame. The letter explained that they concluded no error or fraud occurred because : 1. Our records show that the PIN was not changed prior to the period of unauthorized usage, or that the last PIN change was completed by a phone number, IP address, or device linked to you. As at least one of the unauthorized transactions within the claim was PIN based and we have determined that the PIN transaction ( s ) were not in error, we have also concluded that the signature transaction ( s ) in the claim were not in error.

2. Our records show that the account balance was checked during or after the period of unauthorized usage using a method consistent with methods previously used to access the account, but no action was taken to block the card or dispute the activity.

3. Our records show that the online account center was accessed during or after the disputed activity, but no action was taken to block the card or dispute the activity.

4. Our records do not show any evidence of a third party accessing the IVR or your online account center prior to, or during, the disputed activity.

Based on the above information, it appears the decision to deny my fraud claim was based solely on the transaction record of my access of my account via the online account center and the assumption that there was not fraud because the Card was used with the PIN. 

In reviewing the transaction information for the period of XXXX XXXX XXXX my Card was used at ATM machines in the XXXX, KY area XXXX XX/XX/XXXX and XXXX and in XXXX, TN XX/XX/XXXX to XX/XX/XXXX. My Card was used at the ATM to check the balance and then to withdraw the maximum amount allowed by the machine per transaction up to the maximum daily amount allowed, which was {$900.00}. Specifically, on each day the Card was used to do three or four separate transactions in immediate succession. 
I was at work at my job in XXXX, KY the entire week of XX/XX/XXXX. 
I had the Card in my possession the entire time involved, including the week of XX/XX/XXXX, as I used it for a purchase after work on XX/XX/XXXX. To be clear, I have always had possession of my Card. 
XX/XX/2022 I filed a police report with the XXXX, KY police in relation to the XX/XX/2022 ATM transactions in the KY area. I also tried to file a police report in XXXX, TN, but was not able to because I was told by the dispatcher I spoke to that I could not file a police report if I am not physically in XXXX. 
On XXXX XXXX XXXX  I called PayPal to speak to a supervisor about the situation. I spoke to two supervisors. The first supervisor told me I could reopen the fraud claim and that he would help me reopen it, but then he put me on hold. After being on hold for about 20 minutes, my call got sent back to the main menu and I had to start the process all over again. The second supervisor I spoke to said she did whatever she needed to do in the system to submit my request to reopen my claim and that I would have to wait to see if the claim would be reopened. When I asked her how long that would take, she put me on hold. After being on hold for about 5 minutes, my call got sent back to the main menu again. At that point I had been on the phone with PayPal for 2 hours and 52 minutes, so I gave up trying to get any information from PayPal via the customer service number. 
On XX/XX/XXXX, I sent a letter to PayPal, netSpend and XXXX requesting that they reopen my fraud claim and explaining that I had possession of the Card the entire time and had been at work in KY the entire week of XX/XX/XXXX and provided my work time records as proof. ( See Exhibit C. ) On XX/XX/2022 I received an email from the netSpend Dispute Resolution Department which acknowledges my request to reopen the claim and says and the matter is still under investigation, but then recites the same reasons as before as the basis for denying my claim. ( See Exhibit D. ) ; On XX/XX/2022, I received a call from netSpend ( XXXX ) notifying me of the following : o There is no such thing as a request to appeal or reopen a claim ; o netSpend will not reopen my claim and will not consider any of the information submitted after the initial claim decision ; and o The person who investigated my claim made the decision and there is nothing else to be done. 
I sent a certified letter to PayPal, netSpend and XXXX summarizing my issues with the determination that there was no fraud and requesting that they consider all information relevant to my claim and, to the extent that there are open questions to investigate the claim further. ( See Exhibit E. ) I also set forth the reasons I am not responsible for the unauthorized transactions on my Card under the Cardholder Agreement. I also requested that PayPal and netSpend provide the following information in writing if they refuse to reopen my claim or consider any of the information I provided to them : Policy on investigation of claims, including any policy related to requests to reopen or appeal claim decisions and/or the consideration of information provided after a claim determination is made. ; Policy/procedures on how PayPal and netspend monitor account transactions to identify potential fraudulent activity, including any policies/procedures specific to identifying skimming situations. ; and Clear statement as to why PayPal and netSpend denied my claim. 

In early XXXX, I received a call from attorney XXXX XXXX XXXX XXXX XXXX in response to my letter. XXXX XXXX explained that he represented PayPal and that PayPal is not responsible for anything regarding my Card because it is a PayPal pre-paid card and has nothing to do with a PayPal account. I provided my claim number to him and he said he would pass the information along to PayPal to see if there was anything they could do. He sent a follow up email on XX/XX/XXXX reiterating that there is nothing PayPal can do because the Card is not related to a PayPal account and, therefore, I need to follow up with netSpend. ( See Exhibit F. ) On XX/XX/XXXX, I sent XXXX XXXX an email citing the terms of the cardholder agreement identifying PayPal as a responsible party, sharing an email from a Detective from the XXXX, KY police department who investigated the fraudulent ATM transactions in KY and got video from one of the transactions showing a white male wearing a mask and hat doing the transaction ( the Detective has been trying to reach PayPal/netSpend for weeks to provide the information but has not been able to get through to someone who can help ) and requesting that PayPal connect me with the appropriate person at netSpend, its business partner, to handle my matter if PayPal 's position is that this is not their responsibility. ( See Exhibit GXXXX ) On XX/XX/2022, XXXX XXXX sent me a letter stating that PayPal is not responsible for the matter because the PayPal Prepaid card is offered and maintained by netSpend and referred me to the general netSpend number and XXXX XXXX XXXX rather than a specific person at netSpend who can address my issues. ( See Exhibit H. ) To date, I have not received any response from either netSpend or XXXX to my certified letter. 
This complaint is my last attempt to resolve this matter before pursuing arbitration against PayPal, netSpend and XXXX for breach of the cardholder agreement terms and violation of the spirit, if not the letter, of Regulation E. Following are my issues/questions/requests : What investigation was conducted? To the extent it involved only a review of access to the online account, how is this adequate when I told the person I reported the fraud to that I never lost possession of the Card? 

Why wasn't the additional information I provided considered? The decision on my report of fraud was provided at the same time the list of fraudulent transactions was provided to me. It was not until I saw those that I was able to determine that many of them occurred in a city 200 miles away from where I work while I was at work. This was ignored along with the information about the video of someone who was not me doing one of the transactions. 

What is the specific reason for denying my claim? If it is because the PIN was not changed at any time, this is not reasonable given that I did not lose my Card I had possession of it the entire time. It is pretty clear that someone must have skimmed my card and I would hope that these companies are aware skimming is a problem. 

Why has no one responded substantively to my letters, including my certified letters? Why didn't PayPal, through its counsel, XXXX XXXX, connect me with a responsible person at netSpend, PayPal 's business partner, to provide a response? 

Who is responsible for this and have they complied with their obligations under the Cardholder Agreement and Regulation E? 

What is the Consumer Financial Protection Bureau 's role in ensuring that companies comply with the terms of their cardholder agreements and Regulation E? 

My ultimate request is that the balance of my card as of XX/XX/2022 less the one transaction I used it for on XX/XX/2022 for a {$35.00} debit at XXXX XXXX gas station be restored in full, including for any transaction or other charge related to fraudulent transactions. By my accounting, the amount that should be restored to my Card is {$4000.00}

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation