Seven consumer advocacy groups, the Center for Responsible Lending, Consumers Union, U.S. PIRG, National Consumer Law Center, Center for Public Policy Priorities, Coalition of Religious Communities and SC Appleseed Legal Justice Center, have joined together to issue a call for the Consumer Financial Protection Bureau to increase the consumer protections that come with prepaid debit cards.
Some of the protections the groups are calling upon the CFPB to make mandatory for prepaid cards are:
That a clear, up front disclosure of all fees associated be made available to the consumer prior to obtaining a card; The elimination of overdraft fees on all prepaid cards; The right for consumers to receive statements and other forms of information pertaining to their transactions; Caps on the amount of money cardholders can lose should their card be lost or stolen and used to make unauthorized charges; Guarantee the prompt crediting of missing money no later than 10 business days from when problem is reported by the consumers.
Michelle Jun, the senior attorney for Consumers Union explained in a press release why the advocacy they are now calling for these changes to be made.
“As the cost of bank accounts continue to rise, more and more consumers are turning to prepaid cards as an alternative. But prepaid cards offer weaker protections than bank accounts and can be loaded with hidden fees that make them costly to use,” stated Jun.
Currently, consumers using prepaid cards are only availed of voluntary protections extended by card issuers in the event their card gets lost or is stolen and then used to make unauthorized purchases. Such protections are subject to change at any time and often come with loopholes. Additionally, the fees attached to prepaid cards are typically poorly disclosed, which makes the cost of using these cards much higher for consumers than they expect.
The implementation of the additional protections would make the safety of using a prepaid debit card much more similar to using a regular debit card that is linked to a checking account. More and more consumers are turning to prepaid debit cards to as the cost of banking steadily increases.