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Suze Orman’s Pre-Paid Debit Card Scam

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I got an email from my friend Kosmo at The Soap Boxers on Monday morning about Suze Orman creating a line of pre-paid debit cards. His exact words, "$36/year just to access your own money?" That was kind of rhetorical question. The point he was trying to make was clear - it's not the typical product that personal finance gurus typically endorse.

My first thought was that if it was something that helped with your credit, it might be a good idea like a secured credit card. It could, in theory, be used as a bridge to help someone build credit, improve their credit score, and get a bank that doesn't charge such outrageous fees to access your own money. However, that's not what is happening with Orman's card. As John Ulzheimer points out at around the 2:50 mark in this interview it doesn't help with your credit score.

... and it shouldn't. It is a debit card, not a credit card. Your credit is supposed to be measured by how you used credit, money that you don't have. If I buy milk with money I already have through a pre-paid debit card, it doesn't, and shouldn't, tell the credit bureaus anything useful about my ability to responsibly handle credit.

This hasn't stopped Suze Orman from heavily implying that it will help people with credit scores. In perhaps the biggest blogging sacrifice I've made for you, the reader, I subjected myself to watching The View this morning. (Okay much of it, I skipped due to the magic of DVR.) Throughout the show, I was thinking, "They couldn't have gotten Judge Judy to join in to complete the torture?" Though I will admit that Joy Behar's commentary was actually entertaining.

During The View, Suze Orman heavily implied that it would help with credit scores, but didn't actually say it. She had a two minute rant about how important FICO scores are in this economy and then introduced her card. Here are some quotes from her:

You use this instead of cash. It's a debit card... The main reason that I want you to use this is that sometime people don't use cash, they don't carry cash anymore, and there's no record of what they are doing. Overall, the big movement of this card, and the people-first movement, is I want debit cards to create FICO scores. Currently they do not.

If you pay on your debit... if you pay in cash you get penalized because you don't get any credit for that.

I'm trying to change America. Join me in my people-first movement.

Now if just watched The View and didn't have any background about this card, you would think that it helped build credit. However, if you watched the John Ulzheimer video above it doesn't currently work that way. Your transaction history can be reported to a credit bureau if you choose, but they don't use it their credit analysis. They just say, "Thanks for the free data about your life... Om, nom, nom, nom..."

This is the kind of marketing that is misleading to consumers. To talk about improving credit for 5-10 minutes and then present a card and talk about the issue as if the card is the solution to building credit. Orman is hoping that it will be the solution one day. Perhaps she expects TransUnion to use that transaction data and start applying it to their credit algorithm. However, she should be open and honest in her marketing that it doesn't help your credit as it is designed today.

This is exactly the kind of thing that the FTC is looking for with their endorsement guidelines. It's the same kind of thing that MonaVie is getting away with on a daily basis.

If that wasn't bad enough for Orman, she's gone full bat-excrement crazy on Twitter attacking personal finance bloggers who call her out on it. She called PT Money "ignorant" and an "idiot". The blog, 20AndEngaged has a good recap of the Twitter fight. GingerLatte from Girls Just Wanna Have Funds suggested that people use the Twitter hashtag #DenySuzeCard.

In the end, I'm not that disappointed with the card itself. As John Ulzheimer said in the video above, it is the best option in a bad category ("the cream of the crap"). It is Orman's misleading marketing of the card and her refusal to enter into any kind of meaningful dialog with critics that I have a problem with. Due to that misleading marketing, I think this article has warranted the use of the word "Scam" in the title.

Last updated on October 13, 2015.

This post deals with: ... and focuses on:

Banking, Money Management

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10 Responses to “Suze Orman’s Pre-Paid Debit Card Scam”

  1. Steve says:

    If credit scores change to incorporate this data I will eat my hat. There are just not going to be enough users of this one card to make it worth FICO’s time to even try to figure out how to incorporate it into the score. It’s hypothetically possible that this will be the first of many debit cards to report usage data to credit bureaus, but I’m not holding my breath. Furthermore, it will always be opt-in only (assuming privacy laws prevent reporting of individual transactions to credit bureaus), giving the data a self-selection bias, meaning FICO is unlikely to rely on said data (out of responsibility to their true customers, creditors).

  2. I can’t even begin to fathom how the purchase data could be used in a credit score. Would you be rewarded for spending more money? Less money? Rewarded for “good” purchases (carrots) and penalized for “bad” purchases (donuts), even though that has nothing to do with credit?

    As you allude to, all this really does is give purchase data to TransUnion, which they can then sell to companies. Suddenly, the whole world will know that I’m a big purchaser of Pepsi and Pringles, and that I wipe my (rear) with Charmin. How does this help me?

    This smacks of George Costanza’s Human Fund. Money for People. Money for Suze, in this case.

  3. Joe Schmoe says:

    Wow. That is an incredible Twitter fight. Suzy has done so much damage to her reputation with this fiasco. I cant believe she let someone talk her into this card promotion and then started a public fight with name-calling over it. Calling PF bloggers idiots was probably her worst move.

  4. Breacan says:

    You nailed it when you said “This is the kind of marketing that is misleading to consumers.”, these sales tactics are deplorable and I liken it to trying to convince people to utilize payday loans. They try to give the feeling that they are just there to help you in your time of need, and then BAM!… you are either no better than you started, or worse off.

    I’ve pretty much ignored this entire Orman debacle and am just going file this under celebrities doing stupid things.

  5. […] Man and Money – Suze Orman’s Prepaid Debit Card Scam. The Lazy Man wraps things up with this: “As John Ulzheimer said, it is the best option in a […]

  6. Glen Craig says:

    There’s one interview out there where Suze mentions she wants to retire in a few years. And now she’s releasing a card full of fees. Hmmm…

    You had me cracking up with that Cookie Monster reference BTW!

  7. […] You Pay Off Debt Consumerism Commentary | 5 Reasons to Beware of 401k Plans Lazy Man and Money | » Suze Orman’s Pre-Paid Debit Card Scam Five Cent Nickel | Make the Most of Your Pay Raise Get Rich Slowly | Make 2012 Better By Asking the […]

  8. […] to the Slowlane.) It's listening to people like Suze Orman, who makes her money via book sales and pre-paid debit card deals, not by funding 401k plans and Roth […]

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