Prepaid cards are one of the fastest growing payment types in the U.S. According to a 2014 study by the PEW Charitable Trusts, consumers loaded over $64 billion onto prepaid cards in 2012, up from $56.8 billion in 2011. A 2013study by the Federal Reserve showed that use of prepaid cards payments increased faster than other noncash payments (such as credit cards, debit cards, and checks). The number of prepaid card transactions rose from 5.9 billion in 2009 to 9.2 billion in 2012.
Despite the fact that consumers are loading more money on cards, and using them more frequently, the industry remains largely unregulated. Depending on the product, a consumer can be hit with a variety of fees for things such as reloading funds, declined transactions, balance inquiries, inactivity, or ATM withdrawals. The fees vary in size and differ by product and there is no current requirement for advance notice of fees that would enable comparison shopping. In addition, the cards are often marketed as a safe alternative to using cash or checking accounts, but may not have FDIC insurance or fraud protection if the card is stolen and used.
To address these concerns, the Consumer Financial Protection Bureau (CFPB) has released a proposed rule to regulate the bulk of the prepaid industry, including payroll cards. Advocates have the opportunity to comment on the proposed rule through March 23rd. Join Woodstock Institute staff for a phone briefing on Monday, March 9 at 10:30 a.m. CT to learn more about the proposed rule and how to submit your own comments. Staff will provide additional information about the prepaid card industry, more information on portions of the rule that could be strengthened, and how community groups and consumer advocates can participate in the process.
Sign up for the Prepaid Card Phone Briefing
It is imperative that the CFPB issue strong rules to protect consumers. The use of prepaid cards is expected to continue growing and consumers who use these cards should be protected from high-cost predatory fees, fraud, and deceptive credit products. Don’t miss the chance to influence these important rules.
Prepaid Card Phone Briefing
Monday, March 9, 2015
10:30 a.m. CT