According to a research conducted by the Consumer Financial Protection Bureau, prepaid cards have soared in popularity since they were introduced. The amount loaded on general purpose re-loadable prepaid cards increased from USD 19.5 billion in 2008 to an estimated USD 98.6 billion in 2014, according to Mercator Advisory Group.
A number of federal regulatory agencies have applied rules to certain types of issuers or cards, but the regulation of the industry has been gradual. The CFPBs proposed rules would address several aspects of card usage. For example, all prepaid card issuers are not currently required to provide regular account statements, but the new rules would call for online statements to be issued.
The new protections would also limit consumers exposure if their card is lost, stolen, or fraudulently used. Right now, consumers have such protections for their credit cards, but not for prepaid cards. The rules would also establish ways for consumers to work with card issuers to resolve any errors on their accounts.
The bureau is also proposing protections for consumers who have set up prepaid card accounts that let them pay more than they have loaded on the cards. Some issuers of these cards use the next funds the consumer loads on the card to pay off the overdraft and any associated fees. The bureau proposes forcing these card issuers to follow the same practices as credit card companies.
The proposed rules will be open for comment for 90 days after they are published in the Federal Register.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now