NetSpend 2010 Annual Report Download - page 16

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Table of Contents
As the laws applicable to our business, and those of our distributors and issuing banks, change frequently, are often unclear and may differ
or conflict between jurisdictions, ensuring compliance has become more difficult and costly. Failure by us, our issuing banks or distributors to
comply with all applicable statutes and regulations could result in fines, penalties, regulatory enforcement actions, civil liability, criminal
liability, and/or limitations on our ability to operate our business, each of which could significantly harm our reputation and have a material
adverse impact on our business, results of operations and financial condition. For additional discussion of the laws to which we are subject,
proposed changes to such laws, the related impact that such changes may have on our business or financial position, and potential penalties
associated with failure to comply with such laws, see "Risk Factors—Risks Relating to our Business—We, are subject to extensive and
complex federal and state regulation and new regulations and/or changes to existing regulations could adversely affect our business."
Banking Laws and Regulations
The products we market and process are the products of MetaBank, Inter National Bank, The Bancorp Bank, SunTrust Bank and U.S.
Bank, or collectively our issuing banks, and are subject to various federal and state laws and regulations, including those discussed below.
MetaBank is a federal savings banks primarily regulated by the Office of Thrift Supervision, or the OTS. Inter National Bank and U.S. Bank
N.A. are each national banks primarily regulated by the Office of the Comptroller of the Currency, or the OCC, and their respective holding
companies are primarily regulated by the Board of Governors of the Federal Reserve System, or the FRB. The Bancorp Bank is a Delaware
state-chartered bank principally regulated by the Delaware Office of the State Bank Commissioner, or the DOSBC, and the FRB, and its
holding company is also principally regulated by the FRB. SunTrust Bank is a Georgia state-chartered bank principally regulated by the
Georgia Department of Banking and Finance, or the GDBF, and the FRB, and its holding company is also principally regulated by the FRB. As
the deposits of each of our issuing banks are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to the applicable limit, the
FDIC also serves as the secondary federal regulator for each of our issuing banks. As an agent of, and third-party service provider to, our
issuing banks, we are subject to indirect regulation and direct audit and examination by the OTS, OCC, FRB, DOSBC, GDBF and FDIC.
The GPR cards we market through corporate employers as payroll cards are subject to certain portions of the FRB's Regulation E, which
implements the Electronic Fund Transfers Act, or the EFTA. Additionally, while our other GPR cards are not expressly subject to the
provisions of the EFTA and Regulation E, with the exception of those provisions comprising the CARD Act described below, we, and our
issuing banks, treat our GPR cards as being subject to certain provisions of the EFTA and Regulation E, such as those related to disclosure
requirements, periodic reporting, error resolution procedures and liability limitations.
On March 23, 2010, the FRB issued a final rule implementing Title IV of the Credit Card Accountability, Responsibility, and Disclosure
Act of 2009, or CARD Act, which imposes requirements relating to disclosures, fees and expiration dates that are generally applicable to gift
certificates, store gift cards and general-
use prepaid cards. We believe that our GPR cards, and the maintenance fees charged on our GPR cards,
are exempt from the requirements under this rule, as they fall within an express exclusion for cards which are reloadable and not marketed or
labeled as a gift card or gift certificate. However, this exclusion is not available if the issuer, the retailer selling the card to a consumer or the
program manager promotes, even if occasionally, the use of the card as a gift card or gift certificate. As a result, we provide retailers with
instructions and policies regarding the display and promotion of our GPR cards so that retailers do not place our GPR cards on a display that
does not separate or otherwise distinguish our GPR cards from gift cards. See "Risk Factors—Risks Relating to Our Business—Our card
programs are subject to strict regulation under federal law regarding
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