NetSpend and Family Dollar Take a Bite Out of the Poor

The Austin Business Journal reports that NetSpend inks deal with Family Dollar. Netspend's debit cards are scheduled to be sold by Family Dollar nationally starting this month. Since I was going grocery shopping anyway, I stopped off at the Family Dollar nearest my house with the purpose of looking for the new debit cards and comparing prices for any identical items on my shopping list.

When I parked I noticed the following grouping of stores: Ace Cash Express, Family Dollar, RAC rent-a-center, Dollar Tree, and Title Bucks auto title loans. There were two employees in the Family Dollar, and they both greeted me. I found this both surprising and pleasant. There were displays at the front of the store with what is evidently a rotating selection of items for sale for a dollar. Most of the items in the remainder of the store cost more, but I found my usual brand of toothpaste for $1.00. The exact same tube was selling for $0.85 at my usual grocery store, however. A phone card for my pay-as-you-go cell phone was $19.99 as Family Dollar and $19.88 at my usual store. The only other identical item on my list that was stocked by both stores was my wife's favorite toilet paper, which was $8.50 at Family Dollar and $6.97 at my usual store. In summary, Family Dollar's higher prices fit the convenience store model, not a grocery store. This despite the fact that only two employees are present, the store is open for much shorter hours than most grocery stores, and there is none of the hassle of dealing with the Alcoholic Beverage Commission's licensing and regulations since they don't sell beer and wine.

I looked for the debit cards scheduled for this month, but didn't find them. Perhaps their roll out has started in another part of the metroplex or the country.

Related posts, starting with the most recent.
Cordray Index Losers: netSpend
netSpend and BET Take a Bite Out of the Poor
A Bite Out of the Poor
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Cordray Index Losers: netSpend

The Austin Business Journal reports a first quarter loss for netSpend of $5.8 million on revenue of $91.4 million. Compared to the first quarter of 2011, this is a $13.6 million drop in profit.

"Austin-based NetSpend (Nasdaq: NTSP) attributed the $13.6 million decline in profit to litigation-related losses of $25.3 million."

Will anybody clue me in about the litigation? Did they lose or settle the lawsuit they filed against MPower (Mango Financial)?

The Cordray Index Losers
netSpend and BET Take a Bite Out of the Poor

UPDATE: Finally found that Netspend lost a patent infringement suit with Alexsam, Inc., which was awarded $18 million royalties. Other costs of the lawsuit are estimated at $6 million.

netSpend and BET Take a Bite Out of the Poor

netSpend Holdings, one of The Cordray Index Losers, is headquartered here in Austin, Texas. Of the 33 jobs listed on their website, 27 are likewise here in Austin. These job postings are temporally associated with an agreement with Black Entertainment Television to provide prepaid debit cards to the 22% unbanked households (ca. 19.8 million) out of their ninety million US subscribers. The "bite" for the Control Prepaid MasterCard is reported by Lori Hawkins of the Austin American-Statesman.

Users of the BET Control card pay $7.95 per month, $2.50 per ATM withdrawal, $1 for overspending and 50 cents to check the account balance via telephone or ATM. Those with $500 deposited directly on the card qualify for a lower monthly fee of $5, the high-yield checking account and a $10 “purchase cushion” that lets users overdraw their accounts without penalty.

This press release on the netSpend website naturally has a more positive view of the Control Card, which they began selling last month. Ryan Mack tells a more complete story at the griot, including the fact that the only way to find out all the fees associated with the card is to get one. He thoroughly debunks the marketing of the Control Card, with the conclusion:

The larger point that I want to emphasize is that as long as we continue to use these financial predators, the more they will feel they can market to our communities. We continue to feed the beast simply because there are those who want to capitalize on what we don't know. I have personally assisted those who would have been deemed to be "unbankable" -- homeless, bad credit, and formerly incarcerated; I have taken them to a credit union to open a free bank account and get access to the precious debit card with no fees. The only problem with this solution I have implemented through my nonprofit is there is a limited profit in it for those who want to make a profit for themselves outside of feeling good for helping someone. 

 So, Austinites, do you want one of those 27 jobs?