And the kredit kard kompany is now krying foul. Revenue Resource Group has filed a breach of contract claim against the Kardashian sisters (Kourtney, Kim, and Khloe) seeking $75 million in damages to pay for the losses it incurred when the reality stars backed out of a deal to endorse a prepaid debit card featuring their likeness and name (“The Kardashian Kard”).
The card, which hit the market in November 2010, was recently criticized by industry experts, including Connecticut Attorney General, Richard Blumenthal, for having “pernicious and predatory fees.” The card was being marketed heavily to teenagers and young adult fans of the reality stars, as an alternative to a credit card that allowed debt-free spending. However, this card, like many other prepaid debit cards, comes in conjunction with some fairly outrageous fees. CNN reported that “while regular bank debit cards are typically free and don’t charge any fees, a 12-month Kardashian Kard cost $99.95 just to own, including a card purchase fee of $9.95 and 12 monthly fees of $7.95.” Beyond these initial costs, the Kardashian Kard charged several additional transaction fees every time the user added money to their card ($1.00), withdrew money from an ATM ($1.50), spoke with a live operator ($1.50), paid their bill directly using the card ($2.00), etc. Similar prepaid debit cards are becoming increasingly popular for consumers who are looking to avoid the debt of an actual credit card. The fees attached to the cards are highly criticized by industry experts, however, and consumer advocacy groups are warning the public to think twice before signing up. Blumenthal explained that the “high fees combined with its appeal to financially unsophisticated young adult Kardashian fans” makes this card especially troubling.
Responding to the public concerns, an attorney for the Kardashian’s sent a notice of termination to the banks and licensing companies, along with a statement indicating that the negative press surrounding the card was threatening to his clients’ personal and professional ventures. The Kardashians felt that they would rather terminate their involvement with the controversial debit card than risk tarnishing their positive public persona. They decided to end their involvement sooner rather than later, and before any of the legal concerns materialized. Revenue Resource Group filed an action against the sisters shortly thereafter. In their suit, the LLC asserts that the Kardashians improperly terminated their two-year agreement, thus breaching their contract and causing a loss to the company of more than $75 million. In accordance with their original agreement, the Kardashian sisters were to promote the card through their websites and social media, while appearing at various events on behalf of the company. By terminating their involvement altogether, the girls have breached the agreement and will now have to respond to the civil action. CNN reports that the suit seeks “$75 million to cover losses it expects to incur by the broken deal, as well as $500,000 for its out-of-pocket expenses.” Revenue Resource Group claims that it spent $65,000 “on a launch party, including $7,000 for the sisters’ hair and makeup and $1,900 for an Escalade to drive them around.” The Kardashians have yet to make a public statement pertaining to the lawsuit allegations.