Less than a month after it was launched to great fanfare, University National Bank of St. Paul has reportedly ended the sale of Kardashian Kard, a prepaid debit card that came in for heavy criticism from consumer advocates.
According to media reports late Monday, the Kardashian sisters, reality TV stars with their E! Network series “Keeping Up With the Kardashians,” pulled the plug on the card after weeks of withering criticism and after University Bank received a letter from Connecticut Attorney General Richard Blumenthal, questioning whether the card is in violation of the state’s gift-card regulations.
CNNMoney.com reported that the Kardashian family’s attorney sent a notice of termination yesterday to the banks and licensing companies responsible for issuing the card and managing the program, saying the “negative spotlight … threatens everything for which they (the Kardashian sisters) have worked.”
“The Kardashians have worked extremely long and hard to create a positive public persona that appeals to everyone, particularly young adults,” the family’s attorney wrote in the letter. “They have been successful in doing so because they are recognized as honest, ethical, and fun-loving individuals who are kind and caring to others.”
CNNMoney and MSN both reported that University Bank had issued a statement, noting that only 250 “Kards” had been sold and that “those customers will be ‘promptly notified’ that their cards are only active for 30 more days, at which point any balances will be refunded.”
(For a summary of the criticisms and an interview with David Reiling, CEO of Sunrise Community Banks, the holding-company parent for University Bank, see my story as reported here last Friday.)
The Connecticut AG’s letter to University Bank, accompanied by a press release, was issued on Black Friday, charging that “the Kardashian Kard is particularly troubling because of its high fees combined with its appeal to financially unsophisticated young adult Kardashian fans. Keeping up with the Kardashians is impossible using these cards — laden with pernicious and predatory fees that swallow card value.”
The “Kard” came in for criticism from consumer advocates for being targeted at the Kardashian sisters’ teen and tween fans and for its hefty fee schedule. These included a 6- or 12-month upfront prepaid fee of either $59.95 or $99.95 just to own the card, an additional monthly fee of $7.95 after that, additional fees for adding money to the card ($1), a fee for speaking with a live operator ($1.50), and a fee for using the card to pay bills automatically ($2).
Thanks for getting this story out there, and representing all points of view.
To clarify, prepaid cards are NOT covered by Reg E, because money that sits in a pooled bank account is not an “account” under Reg E. A first glance at the regulation may not make that clear – you have to read the official staff commentary.
The Kardashian Kard and other prepaid cards may provide some protections for lost/stolen cards in their contracts, but we’ve found that these protections do not work in practice like mandatory federal protections. Card issuers can change or rescind their contracts at any time – as most consumers already know, with traditional credit cards!
To read Consumers Union’s research on prepaid cards, go to http://www.defendyourdollars.org.