Prepaid and the law

The prepaid card industry is being tested in the labyrinth that is the U.S. legal and regulatory system. Patent infringement cases pit competitors one against another. Law enforcement is making providers jump through hoops to comply with anti-money-laundering initiatives. And federal and state governments are passing laws that have businesses scrambling to figure out what their compliance obligations and responsibilities are. The 1201B edition of SellingPrepaid E-Magazine deals with two cases that have been in the news lately.

First, a complex legal battle is underway between general purpose reloadable prepaid card provider nFinanSe Inc. and prepaid card distributor InComm. The host of questions before the district court in Atlanta involve an alleged price fixing conspiracy and the potential violation of federal anti-trust law, as well as breach of contract issues that seem to have soured what had been a lucrative business arrangement for both parties.

Next, for many months lawyers have been grappling with New Jersey's amended unclaimed property law designed to allow the state – for the first time – to seize the unused balances on gift cards. A recent ruling made by a court of appeals hasn't completely settled the issue. In fact, it seems to raise as many questions as it answers.

nFinanSe, InComm wrangle over reload network

General purpose reloadable (GPR) prepaid card provider nFinanSe Inc. and prepaid card distributor InComm are locked in a legal battle over InComm's Vanilla Reload Network. At issue is whether InComm is engaged in price fixing and anti-competitive business practices over how it operates the reload network, and if nFinanSe in particular is the victim of those practices.

N.J. unclaimed property ruling favors prepaid, sort of

A Jan. 5, 2012, ruling by the U.S. Court of Appeals for the Third Circuit upheld an injunction that blocks New Jersey from enforcing all of the controversial gift card provisions contained in its updated abandoned property laws. The law firm Ballard Spahr LLP called the ruling "a victory for gift card issuers." However, it apparently wasn't a total victory, as aspects of the law that gift card issuers wanted eliminated were deemed legal and enforceable.

Prepaid in brief

A concise, up to the minute update on what is happening in the prepaid world.