Brown v. Stored Value Cards Inc.

Summary

The Multnomah County jail (Multnomah) confiscates any cash carried by an arrestee upon incarceration. The inmate's funds are kept in an inmate trust account. Considering this process expensive, Multnomah contracted with Stored Value Cards d/b/a Numi (Numi) to return released inmates' funds via prepaid debit cards (Release Cards). Numi's fees were to be paid by the former inmates released into the public. Plaintiff Danica Love Brown (Brown) was arrested while participating in a public protest. At the time of the arrest, Brown carried $30.97 in cash that was confiscated along with the rest of her personal belongings. She was released about seven hours later, and she was given a Numi debit card loaded with $30.97. Brown used the card for small purchases but five days after her release Numi had debited the $5.95 monthly service fee. Brown sued Numi and its partner Central National Bank and Trust Company (collectively, Defendants), for violation of Section 1693l-1 of the Electronic Fund Transfers Act (EFTA), which prohibits service fees on general-use prepaid cards. Defendant moved to dismiss and the court granted the motion.

Reversed and remanded. EFTA protects the rights of consumers in electronic fund transfers. 15 U.S.C. Section 1693(b). Section 1693l-1 prohibits charging service fees to "general-use prepaid card." A general-use prepaid card is (1) "redeemable at multiple, unaffiliated merchants or services providers, or automated teller machines"; (2) "issued in a requested amount"; (3) "purchased or loaded on a prepaid basis"; and (4) "honored ... by merchants for goods or services, or at automated teller machines." Section 1693l-1(a)(2)(A). A general-use prepaid card does not include a card that "is not marketed to the general public." Section 1693l-1(a)(2)(D)(iv). Defendants argued that Section 1693l-1 did not apply because the Release Cards were not marketed to the general public. However, the Release Cards were issued to inmates when they rejoined the general public. Defendants indirectly marketed the cards to released inmates. Defendants marketed the card program to correctional facilities and Multnomah did not give released inmates a choice of whether to accept the cards. Therefore, Defendants marketed their card to the general public and the court erred in dismissing the claim.

— Carlo Nardone