Consumer complaint received 2025-05-20 00:00:00
Product: Prepaid card — General-purpose prepaid card
Issue: Unexpected or other fees — 
Company: Netspend Corporation
State: FL

Complaint narrative:
Formal Complaint : Netspend XXXX XXXX XXXX XXXX XXXX XXXX to Verify Refund Requests Subject : Netspend ( XXXX, XXXX. ) Enables Fraud by Allowing Disputes Without Requiring Account Verification To Whom It May Concern, I am writing to report an ongoing issue involving Netspend, a prepaid card service operated under XXXX, XXXX, that is abusing the chargeback process and actively obstructing merchants from verifying refund legitimacy. Their current policies encourage fraud, penalize merchants, and sidestep the verification standards required by most financial institutions. 

The Core Issue : Netspend cardholders often : Change cards or request refunds to new cards not used in the original purchase Then request a manual refund from the merchant to a new card number But when asked for proof that the new card belongs to the same account, they state that Netspend will not provide any documentation Instead, they are encouraged by Netspend to initiate a dispute Why This Is a Major Problem : The merchant can not legally or ethically issue a refund to a different card without proof of ownership or connection to the original payment Netspend refuses to provide verification ( such as a simple account statement or confirmation letter ), while every other financial institutionincluding XXXX XXXX XXXX XXXX  and will Without this proof, the merchant is left vulnerable : If we refund the wrong card and a chargeback follows from the original card, the merchant is hit twice The system meant to prevent fraud is now being weaponized by Netspends lack of basic verification support Netspend Has Resources to Dispute, But Not to Support : It is unacceptable that Netspend : Refuses to assist merchants with verifying basic account info But has the funding and systems in place to file chargebacks at will Meanwhile, they heavily monetize users through the following abusive fees : {$1.00} per ATM withdrawal $ 5 monthly fee ( or more, depending on plan ) {$1.00} per purchase ( if not on direct deposit plan ) {$2.00} cash reload fees {$5.00} inactivity fee {$3.00} balance inquiry fee And otherscreating a business model that profits more from confusion and disputes than legitimate banking The Bottom Line : Netspend is not a bank. It is a prepaid card platform that should be regulated like a gift card, not given the same dispute powers as a verified banking institution. 

If they : Can not or will not provide account documentation, Can not verify that the refund is going to the same account/cardholder, Can not validate the card used in the original payment... 

Then they should not be permitted to initiate chargebacks on behalf of users. 

This is not just inconvenientits a growing fraud pipeline that enables abuse, punishes merchants, and undermines the integrity of the financial system. 

Requested Actions : Investigate Netspends internal policies regarding merchant support and verification Enforce regulation that dispute rights require documented proof of account/card ownership Reclassify prepaid services like Netspend under gift card dispute limitations if they can not meet banking verification standards Thank you for your time and consideration. This matter is affecting businesses, enabling fraudulent refunds, and must be addressed.

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