Consumer complaint received 2017-06-12
Company: U.S. BANCORP
State: UT
Product: Credit card or prepaid card
Sub-product: Government benefit card
Issue: Problem with a purchase or transfer
Sub-issue: Card company isn't resolving a dispute about a purchase or transfer

Complaint:
On Saturday    XXXX   XXXX   XXXX   a  purchase of {$56.00} was authorized for hotel services using a prepaid government benefit card white labeled  by US Bank.  The card account was pre-authorized for an amount above ( 20 % of the transa ction )  the transaction amount, or approximately {$65.00}. I called the customer service line on the back of the card and spoke with the floor supervisor on or about, Sunda y   XXXX   XXXX   XXXX   at   XXXX   XXXX  .   <P/> When speaking to the supervisor she gave conflicting statements. She stated that an authorization hold was placed on funds in the amount of 20 % of the transaction amount, in addition to the transaction amount, as  1 ) a hold to cover incidentals placed by the merchant ; and as 2 ) a hold placed by the prepaid card issuer as a term and condition of use of the card. When asked to return the funds to the card account, the floor supervisor refused.   <P/> The transaction constitutes both theft by conversion and fraud on the part of either the card issuer or the merchant.   First, the transaction amount of {$56.00} is the only amount represented or authorized at the time of transaction. Any amount debited to the card account that does not accurately reflect that amount squarely positions the transaction amount of {$56.00} as fraudulent because the amount of the transaction is therefore a misrepresentation of material fact. The merchant secured funds or exercised unauthorized control over funds that it never represented to the purchaser or bargained for authorit y to do so. Fraud and theft by c onversion.   In the alternative, in the event that the card issuer placed the 20 % hold on the card account funds and the card issuer did so as a matter of the terms and conditions of the card, then the card issuer has converted funds under unenforceability provisions of the cardholder terms and conditions. First, the cardholder has no bargaining position to speak of when using the government issued benefit card. Therefore, the card issuer bargains from a position of gross superiority. As a consequence, the cardholder, according to the terms and conditions of the cardholder agreement, implicitly bargained for a 20 % hold on certain transactions for a term of up to 20 days. Such an argument is absurd. Cardholders of government benefit debit cards are not financially secure individuals. They do not hold a position of power and are best categorized as a suspect class for the precise reason that, generally speaking, they are in a position of powerlessness. Needless to say, it is of no benefit to these cardholders to bargain for the " holding of funds '' under any circumstances. In fact, these holds serve to benefit the card issuer 's profits, and they do so at the cardholders expense. Therefore, the card issuer exercised unauthorized control over funds at the cardholders expense under the pretense of unenforceable provisions of the cardholder terms and conditions. They by conversion.

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