Emily Languell filed her taxes as quickly as she could this year. She was behind on her car payment, phone bill and other expenses. She needed the refund.
Before January had expired, she was at an H&R Block office in north Spokane. Because Languell – a 24-year-old single mother who works at McDonald’s – had not filed her taxes for two years, she wanted help. Expecting a refund, she brought along her bank account information to set up a direct deposit.
At the tax office, she says, she was pressed to consider a different option: Loading her return onto a prepaid MasterCard through H&R Block.
“They pushed me into getting their card, by saying, ‘Oh, you get your return faster this way,’ ” she said.
Faster sounded good to her. Languell admits that she was not as attentive to detail as she might have been. She was chasing her toddler around the office; she was relying on the people there to guide her through an unfamiliar process. A couple of weeks after she filed her taxes, she got her Emerald Card, with more than $3,000 loaded onto it. She paid H&R Block $315 for doing her returns, she said. She caught up on her car payments. Paid the phone bill. Bought some clothes for her 16-month-old son.
Last week, she took the card to Spokane Media Federal Credit Union, where she banks, and deposited the remainder, $742.86. That was when she discovered she’d be charged $25 for the transaction.
Languell believes she has paid other fees as well, although she didn’t track them.
H&R Block responded to a request for an interview with a written statement, mostly repeating the information it posts on its website. The $25 fee is listed there, as are other fees such as $2.50 for some ATM withdrawals. The card doesn’t charge a per-purchase fee.
H&R Block’s foray into prepaid cards, a booming market serving people who are “underbanked,” has been significant. It started offering the Emerald cards in 2006. According to a company release, H&R Block issued almost 3 million cards in 2012, with more than $9 billion loaded onto them.
It’s one part of a large and growing industry, and one that consumer protection advocates say flies well under the radar of regulators. The new federal Consumer Financial Protection Bureau has said it will be working to require greater transparency from those who issue the cards because it can be difficult for consumers to decipher exactly how much in fees they will be paying.
Forbes weighed the pros and cons of the cards earlier this year.
“Prepaid cards are helping many low-wage workers without bank accounts, for instance, receive their paychecks avoiding the risk of losing a paper check. But the prepaid card industry is still a relatively young segment of finance and the rules and fees are not always clear. The fees range widely and they can include anything from point of sale fees (literally, a fee is charged to the consumer when the card is swiped), reloading fees, monthly maintenance fees and even in-network ATM fees. The fees can be … absurd – like charging $2 when a consumer calls for customer service.”
Consumer Reports rated prepaid cards for transparency, security and fees earlier this year. None of the cards scored an “excellent,” but H&R Block’s Emerald Card was among the best of them. It was ranked “very good” and was credited for having fewer hidden fees.
Languell, a 2008 graduate of Lakeside High School, has other experience with prepaid cards – it was how she received payments for donating plasma several times, she said. She said she expects to pay fees but didn’t expect or understand the fees she would pay with the Emerald card. She said that on a “person-to-person” level, her tax preparer should have taken greater pains to make sure the fees were clear.
“I told them, I need your guidance. Guide me in a direction that’s not going to screw me over,” she said.
She had shown up that day in January ready to arrange a direct deposit. She wishes she had stuck with that plan.
“You know what I could do with $25?” she said. “That could buy me a pack of diapers, a pack of wipes and a toy.”