KIYC: Issues with prepaid cards leave some customers with frozen funds

Prepaid cards are becoming a popular alternative to credit cards. But Kane In Your Corner finds thousands of customers have complained that their cards have wound up frozen, leaving them without access to their own money.
Dennis and Dorothy Sveda of Toms River decided to use a prepaid Green Dot card for online shopping to protect themselves from online scams. But when Dorothy recently disputed a charge with a merchant, Green Dot informed her that unlike a credit card, it could not assist with disputes “related to delivery, quality, safety, legality or other aspects of goods and services purchased.” It suggested she cancel the card and have their funds transferred to a new one.
But the Svedas say the new one couldn’t be activated.
“They said they needed to verify who I was,” Dorothy says. “And they were going to text me or give me some sort of code, or some kind of ‘something.’ They never did.”
Dennis Sveda tried to activate the card online but kept getting a message telling him that he had exceeded the maximum number of attempts and should try again later. “We’ve been getting this for the past two weeks,” he says.
The Svedas aren’t alone. More than 2,000 consumers complained to the Better Business Bureau about Green Dot prepaid cards alone. One of the most common complaints: cards that can’t be activated, loaded or registered, leaving people unable to access their own money. But most of the complaints are marked as resolved and the BBB gives Green Dot a rating of A+.
A Green Dot spokesman declined to comment on the issue of customers being unable to access funds, but said the Svedas issue had been resolved. Dorothy says Green Dot called her and promised to try to resolve the issue, but so far, she says, that hasn’t happened.
Frozen funds are just one of the complaints consumers have about prepaid cards. Walt Kane will look at some other potential pros and cons Friday in his weekly Consumer Alert.