What's up with that? prepaid cards and tax refund delays

We're in the middle of tax season. Some people are turning to pre-paid cards as an option for deposits. But that option certainly didn't work for one Focus@ 4 viewer.

In a recent "What's Up with That" post, Savannah Dunaway Wilson wrote about her experience with Rushcard said the card didn't disclose..."...that they require loads of your personal information such as copies of tax returns, social security cards, and marriage licenses sent to them multiple times before they will even begin to consider crediting your money to your card."

The company's website says that additional documents are needed for direct deposits of tax refunds. Wilson contends she applied over the phone and was never told that.

Wilson says she asked a Rushcard representative to have her family's tax refund placed on her husband's Rushcard. They filed a joint tax return. She says the tax refund was available February 26th. But she says someone with the company told her-- in order to have it released--she must fax in forms of identification like a marriage licence, social security cards and photo IDs.

"I'm doing everything I can to satisfy what you required of me. Let's forget the fact that you never told me you needed this stuff in the first place," Wilson says while talking about those conversations.

Wilson says she sent multiple copies. One time, she says she was told the faxes were too dark. On the Better Business Bureau's website, Rushcard has had more than 500 complaints within the last three years, many of which concern the release of tax refunds. Nearly 300 of the complaints have been completed.

UAB finance professor Andreas Rauterkus says tax refund issues are among many that can come along with pre-paid cards.

"There are fees for activation, there are fees for using an ATM, there are fees if you don't use them for a while," Rauterkus says.

Attorney Suzanne Martindale with the Consumers Union says read the fine print. The cards, she says, often come with lots of red tape that traditional banks may not require.

"The banks already knows who you are you got an account with them and they have your identifying information...while we are still in tax season I think the better option may be to direct deposit into a bank account, of if you don't have a bank account, then you may want to look into getting a paper check and finding a cheap way to cash it," Martindale advises.

As for Wilson, that lesson came too late.

"We're not wealthy people. We don't have a lot of money...I'm sure I'm not alone in this. This{}is our hail Mary every year," Wilson says.

Focus @ 4 reporter Marissa Mitchell called the Rushcard company and emailed it several times Tuesday. Mitchell has yet to receive a response.

There are no federal regulations to consumer protections on pre-paid cards. But the Consumer Financial Protection Bureau is working to change that as these cards have become so popular. Experts encourage consumers to read and understand cardholder agreements as well as check to make sure a prepaid card company is FDIC-insured.

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