QuakerCard company folds without warning, settles legal charges

University officials are positioning the PennCash system to fill the void created by the QuakerCard's sudden departure. Two years ago, the QuakerCard burst onto the scene when four Wharton seniors turned a class project into a debit card service that came to be used by thousands of University students seeking a cash alternative for use at dozens of local merchants. And in May, just as suddenly, it vanished, followed by a flurry of charges from 36 state attorneys general. Students and merchants alike were surprised by the QuakerCard operators' removal of the card-reading devices from all 30 University City locations where the card was previously accepted. "They didn't tell me anything," said Steve Grant, the manager of the Wawa at 36th and Chestnut streets. "Nobody called up and contacted me or anything like that." Managers at other stores reported similar experiences of having the QuakerCard readers removed without prior notice. Store owners were given a brief note thanking them for their affiliation with the card. Now, as a result of an agreement signed in July with the attorneys general, University Student Services -- the parent company of the now-defunct QuakerCard -- has folded completely. In doing so, company officials resolved widespread allegations of fraud and deception and thousands of students across the country are receiving refunds from the company. The reason behind the QuakerCard's sudden failure remains a mystery, as company officials refused repeated calls for comment. The QuakerCard was introduced in the summer of 1996 by then-Wharton seniors Matthew Levenson, Jon Guljord, Chris Cononico and Michael Vaughan. It functioned as a debit card, with students using money placed on the card to pay for food, groceries and even taxi fares. But as the University Student Services attempted in April to take its product to the national level, problems quickly forced many universities and states to initiate investigations into the company's practices. Through a National College Registration Board, QuakerCard owners hoped to market a Campus Card to 1.8 million incoming freshmen at schools across the country. However, the marketing materials sent out in an April 8 mailing said that the card was "required" for many discounts and services nationwide, prompting a flood of phone calls to schools nationwide. Penn officials were similarly overwhelmed with inquiries from confused parents when the QuakerCard made its debut. In addition, a brochure accompanying the letter featured a card with the University of Michigan logo and the company's World Wide Web site -- now removed from the Internet -- also displayed the names of hundreds of colleges. Officials at University of Michigan and other schools denied any connection with the advertised card and many schools requested investigations of the unlicensed use of their copyrighted logos. Allegations of trademark violations as well as fraud -- the Campus Card was not affiliated with any banks for its purported debit card services -- landed the Wharton grads in trouble. Also, while the mailing stated that a Campus Card was "required" for certain discounts, none of the advertised discounts required any card aside from identification issued by most schools to their students. An executive committee of states which voiced concerns over the Princeton-based NCRB, led by New Jersey, negotiated the July 8 settlement. The settlement stipulates that the NCRB will repay the $67,025 it collected from the 2,681 students and parents who paid $25 for the card, and agreed to give back about 3,100 uncashed checks. University Student Services and the NCRB are also prohibited from doing business for three years. But from where the QuakerCard left off, the University's alternative PennCash system is ready to step in. Using the gold "smart card" chip located on their PennCards, students have been able to make photocopies at University libraries, do laundry and make purchases at a number of area stores -- including Baskin Robbins and Gaeta's College Pizza -- since earlier this year. According to Director of Campus Card Services Laurie Cousart, the University has been actively courting former QuakerCard affiliates to join the PennCash system. Businesses such as Saladworks, Cool Peppers, Brown's Thriftway supermarket and Mad 4 Mex have joined the PennCash bandwagon, awaiting students eager to use their PennCards for cashless purchases. Cousart emphasized that unlike the QuakerCard, the PennCash system has a ready-made market. "The real attraction will be that we have 30,000 PennCards out in service," she said. She added that PennCash, unlike the QuakerCard, is not meant to make a profit for the University, but to "cover costs." The PennCard's debit feature was unveiled in March 1997 as a joint venture between the University, PNC Bank Corp., MBNA Corp. and the University of Pennsylvania Student Federal Credit Union. Students can deposit up to $50 at a time on their cards at any of the Card Value Centers located across campus, with the value of their purchases deducted from their cards at the time of sale.

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