Winning a class action settlement and then learning you can’t really use the money is almost ridiculous. After receiving a $28.34 Tremendous prepaid Mastercard as part of a 2022 settlement payout, a man from New Jersey found himself in a situation similar to that. He entered Walmart. He gave McDonald’s a try. He made a stop at a nearby store. Each and every one of them rejected him. The card would just not be accepted at any physical register.
A proposed class action lawsuit based on that story has been filed in a federal court in New Jersey. It raises unsettling questions about how some fintech companies fulfill promises that appear better in a brochure than they actually do in practice.
Tremendous LLC markets itself as a platform for business-to-business payouts. Businesses use it to disburse money to clients, frequently in the context of class action settlements where recipients have a choice of payment options, including PayPal, direct deposit, a paper check, or a virtual Mastercard from Tremendous. The complaint claims that this final option is offered as being on par with cash. It is referred to by the company as the “most widely accepted prepaid card.” Since the card cannot be physically swiped, the majority of physical stores actually do not accept it. The majority of retailers just won’t allow the account number to be manually entered at the register.
Regarding what happens when cardholders attempt to use these digital cards online instead, the lawsuit makes a clear and fairly damning point. The balance is almost immediately reduced by shipping and handling costs. The complaint describes a hypothetical situation that seems uncomfortably real: a woman wants to purchase a $2.41 ruler with a $12 Tremendous card, but no store will accept her card in person. She visits Amazon. She spent $10.17 on a $2.41 item when shipping, handling, and sales tax are taken into account. Since Tremendous does not permit cardholders to supplement a purchase with a second payment method, she is left with $1.83 on the card, which is insufficient to place another order.
And that remaining amount? She doesn’t get it back. It is not reimbursed by Tremendous. The card functions on a “use it or lose it” basis, according to the suit’s straightforward description of the arrangement. A $3.95 dormancy fee is imposed after just 13 months of inactivity. That fee can eliminate any remaining funds for those who received small settlement amounts, such as $28 in some cases and $12 in others. According to the complaint, this residual balance essentially serves as a hidden fee that cardholders were not informed of when selecting their payment option.
Although the lawsuit aims to represent all New Jersey residents who received a Tremendous card within the relevant statute of limitations period, it is still unclear how many customers have been impacted. It’s important to remember that a digital payment company has previously come under fire for its gift card policies. Apple paid $1.8 million to resolve a class action lawsuit involving allegations of misrepresenting the value and security of gift cards. Although the details vary, there is a trend to be aware of: digital goods that appear to be cash and are advertised as such, but whose value is subtly diminished by fees, limitations, and technical constraints.
The population that the Tremendous lawsuit affects is what makes it seem especially targeted. Recipients of settlements are not usually wealthy investors. They are regular people who were harmed by a business, went through the legal system, and ultimately decided on what appeared to be the most practical course of action. An electronic card. Not on paper. There are no delays. According to the lawsuit, those customers would have made a different decision if they had known what they were really getting into—the online-only usability, the shipping cost issue, and the dormancy fees.
As this develops, it seems as though the digital payment industry has advanced more quickly than the disclosure standards pertaining to it. The court will determine whether Tremendous intentionally misrepresented its product or did so through careless marketing. However, the difference between “most widely accepted prepaid card” and “turned away at Walmart” is substantial.
