Yesterday, the Consumer Financial Protection Bureau (CFPB) announced it has begun testing two new potential consumer disclosure models for prepaid cards in order to provide a standard format for fee disclosure. Currently, each prepaid card company’s retail package discloses different information, which makes it difficult to do side-by-side comparisons. The goal of the proposed disclosures is to present a prepaid card’s most important fees so a consumer can easily identify the best prepaid card for their needs.
Content wise, the two models models are for the most part identical (maintenance fees, reload fees, per purchase fees, ATM withdrawl fees, balance inquiry fees, and inactivity fees) with the exception of a “decline” fee which appears on only one of the models. The two models disclosure forms have currently been tested in Baltimore and Los Angeles and a third select market will be tested soon. CFPB is also seeking comments on the model disclosure through its social media channels (blog, twitter, facebook) and has asked that anyone interested comment through email. Following testing, the CFPB plans to propose a rule “later this spring.”
A report released by The Pew Charitable Trusts finds that general purpose reloadable prepaid cards have become increasingly accessible for consumers and in many instances are now more affordable than basic checking accounts. Although prepaid cards offer many benefits to consumers, protections lag far behind other banking products. There are no federal laws or regulations to protect consumers from hidden fees, unauthorized transactions, or loss of funds. According to The Pew Charitable Trusts, a general purpose reloadable (GPR) prepaid card is a relatively new consumer financial product growing in popularity: a debit card that is not attached to a traditional, individual checking account. The cards can be used at ATMs and retail cash registers, and to make purchases online. U.S. consumers loaded more than $64 billion onto the cards in 2012, more than double the amount loaded in 2009.