Kardashian Kard's Bad Karma

A small community banking outfit in St. Paul, Minn., found its name ensnared with pop culture this week.
By Laurie Kulikowski ,

NEW YORK (

TheStreet

) -- A small community banking outfit in St. Paul, Minn. and a global card network found their names ensnared with pop culture divas this week in a branding scheme gone bad.

The Kardashian Kard (yep, that's card with a "K") was issued in early November by University Bank and under the

MasterCard

(MA) - Get Report

network, was pulled off the market just weeks after as it was launched as critics, including Connecticut State Attorney General Richard Blumenthal, spoke out against the card's high fees.

Kim Kardashian

The card meant to appeal to viewers of the popular reality series

Keeping Up With The Kardashians

, which showcases Kim, Khloe and Kourtney Kardashian and family.

The prepaid card came with some whopping fees, including an activation fee of around $100, purchase fee around $10 and monthly fees of around $8. That is just if you wanted to use the card to buy something, so let's not even mention the $1 fee every time a user adds money to the card as well as additional fees to speak to customer service reps.

After a public uproar the Kardashian clan quickly moved to disassociate itself from the card, while MasterCard said it supports University Bank's decision to pull the card from the market.

The Kardashian Kard fiasco actually highlights a greater trend of banks, as well as MasterCard and

Visa

(V) - Get Report

, moving away from credit and into the prepaid industry due to the strong growth rates.

A study by the

Boston Consulting Group

, which was commissioned by MasterCard this year, estimates that the global prepaid industry could bulge to $840 billion by 2017 from $172 billion at the end of 2009 -- a compound growth rate in the mid-20s, according to MasterCard.

MasterCard and Visa see ample opportunity to expand this product, particularly as they continue on their crusade to convert the use of cash and check to electronic forms of payment on a global level.

While this mission is still in infant stages outside the U.S., Americans are already saturated with credit, debit and now prepaid cards. No longer do you get a Social Security check, but recipients can opt to MasterCard branded prepaid card sent to them.

But just like the Kardashian Kard, many prepaid cards come with huge downsides.

Fees are usually high, which is particularly galling since these cards are typically marketed to those who do not have bank accounts (think illegal immigrants or minors) and who either can't read or don't know any better than to look into the fine print on the customer agreement.

Second, industry experts have warned that prepaid cards can be used by the crooks for other abuses including money laundering.

I have to give props to my former colleague Farnoosh Torabi, who was among the first critics to call to light the dangers of the Kardashian Kard three weeks ago. Torabi questioned whether the card was

sending the right message

to users, given the girls' extravagant lifestyles.

All in all, the card was likely meant to attract the Kardashian fan base, which includes teen-wannabe fashionistas all the way up to 30-to-40-something year old men who are

attracted

to the older sisters, particularly Kim.

But the message from this tale is clear. The card is just another example of how banks and their partners can easily take advantage of consumers simply by offering a product with shiny razzle dazzle, this time in the form of a picture of the beautiful Kardashian girls on the card.

-- Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here:

Laurie Kulikowski

.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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