U.S. Senators Want Answers from Pasadena-Based Green Dot After Debit Card “Outage”

Two  U.S. senators are pushing for clear explanations from Pasadena-based debit card issuer Green Dot Corp. after many of its customers reportedly couldn’t access their accounts holding their own money, due to a glitch in the system.

The affected customers were also prevented from making purchases and withdrawing cash with their cards.

Media reports said two U.S. senators – Sherrod Brown (D-Ohio) and Robert Menendez (D-New Jersey) – have written Green Dot CEO Steve Streit asking for information about what caused the outage and what has been done about the problem.

Brown and Menendez also wrote to Wal-mart Stores chief executive Douglas McMillon and Ajay Banga, chief executive of Mastercard to ask how the outage affected their customers, said the report.

Last month’s outage hit many users of Wal-mart Money Card which is issued by Green Dot and issued at Wal-mart stores. Mastercard processes payments for Green Dot.

Green Dot had said problems with its cards started after the company moved many of its customer accounts to MasterCard’s payment processing system from a different firm.

The senators also want to know how Green Dot was affected financially since a large number of their customers were unable to use their cards.

“These service interruptions are a clear indication that more oversight and consumer protection is needed in the prepaid card market,” the senators wrote, noting that the federal Consumer Financial Protection Bureau is working on new rules for prepaid-card firms.

The problem started in May when customers started asking why they couldn’t check their account balances and make purchases or withdraw cash. It took about two weeks before Green Dot came out with a statement acknowledging  problem and apologizing for the inconvenience.

This week, Green Dot announced Streit is stepping down as Chairman but is keeping his job as CEO. William Jacobs, a payments industry veteran, was chosen as Chairman.