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Lorain residents upset after some $10 pandemic gift cards issued by the city are losing value

Lorain used $59,925 in pandemic funds for 5150 gift cards, but some have lost value
Lorain residents upset after pandemic gift cards lose value
Posted at 10:46 PM, Sep 13, 2022
and last updated 2022-09-14 11:14:04-04

LORAIN, Ohio — Leighann Arroyo and other Lorain-Elyria residents report they were stunned to learn $10 pandemic gift cards issued by the city have unexpectedly lost more than half of their face value.

News 5 confirmed the $10 gift cards have been distributed by the City of Lorain since July of 2021 as a thank you to residents who received the COVID-19 vaccine or have shown proof of vaccination.

Lorain Mayor Jack Bradley told News 5 the city used $59,925 in America Rescue Plan Act funds to pay the MetaBank National Association to process 5150 $10 gift cards, which included $8,425 in processing fees. But Bradley told News 5 he was unaware the contract the city signed with MetaBank included a gift card reduction in value clause that called for the cards to start losing their $10 face value if they weren't used within a year.

Bradley said the contract with MetaBank was incorrectly signed by a member of the city building and housing department and was not vetted by the Lorain law department, which is outside city protocol. The situation has left some Lorain residents like Arroyo wondering how something like this could happen, with the city now facing the potential loss of thousands in federal pandemic money.

“I thought there was $10 on here and there’s only $4.10," Arroyo said. “The city needs to be doing their research better. That’s what they get paid to do."

“It's very important, people rely on this, $10 can go for a dinner that night for people who might not have food stamps or gas in the car to get to doctor’s appointments.”

Lorain Councilwoman at-large Mary Springowski said the incorrect vetting of the contract with MetaBank for the gift cards raises a series of questions.

“There’s a $2.95 inactivity fee, and that’s what’s eating this up, where is this money going, because there is also something that says the funds do not expire," Springowski said. “Some residents are quite upset and they want to know why this was given out, why it was being worth $10, when it’s not worth $10.”

“How many cards have you given out at various times for the lesser amount and how many are still left, that money has just like evaporated, and that’s not what that money was supposed to used for. It's absolutely reprehensible. It shouldn’t have happened. If people were doing their due diligence and doing the job they’re supposed to do, this shouldn’t have happened.”

Mayor Bradley told News 5 he's now using his law department to work with MetaBank to see if some of the lost pandemic funds in diminishing gift card value will be restored by MetaBank, even though Bradley said it appears MetaBank has no legal obligation to do so.

Bradley explained there are some 1200 gift cards that still have not been distributed that are losing value.

“We’re trying to not lose anymore value on these cards and to get these cards redeemed, Bradley said. “We're trying to see if we can get some relief based on the fact that the contract was not properly executed, because it was not approved as to form by our law department.”

“It’s just good customer relations, so I’m hoping that MetaBank, through the effort of the law department, does the right thing and realize that the contract was not properly vetted.”

News 5 reached out to MetaBank about our story and it issued the following statement:

"While it is our policy not to discuss the details of our agreements, we are actively investigating this matter. The results of our investigation will be communicated directly with the city."

News 5 will follow-up on this developing story.

Meanwhile, Lorain residents like Leighann Arroyo are hoping the city will do a better job in administrating some $32 million in ARPA funds set to distributed in the near future.

“City officials need to do a better job in reading the fine print, and getting in contact with the companies and getting the truth," Arroyo said. "Instead of telling people that there was money on here when there really wasn’t.”