A new bill proposal known as “The Prepaid Card Consumer Protection Act” has been introduced by United States Senator Bob Menendez, D-N.J., in the hopes of having it referred to the Senate Banking Committee during the next legislative session. Essentially a reincarnation of the bill he recommended to the Senate last year which never quite gained any momentum, The Prepaid Card Consumer Protection Act would make it mandatory for companies to fully disclose all fees pertaining to their prepaid cards to consumers prior to purchase.
According to Senator Menendez, his repeated attempts to regulate the prepaid card industry, which encompasses both prepaid debit and credit cards, is inspired in part by the hidden fees many prepaid cards carry which can ultimately reduce the value of a card by as much as 20%.
“Consumers need to be very careful about using prepaid cards,” said Senator Menendez, according to online news source northjersey.com. “Now that these cards are becoming increasingly popular, Congress needs to act to rein in the high fees and make sure consumers get the protections they deserve.”
In addition to requiring the full disclosure of all card-related fees before purchase, the bill would abolish certain fees – balance inquiry fees, for example – altogether. A wallet-sized summary of fees would be included with each prepaid card.
Celebrity-endorsed prepaid cards such as last year`s controversial Kardashian Kard, have helped draw public attention to the potentially exorbitant fees associated with prepaid cards. In the case of the Kardashian Kard, interested consumers would have had to pay a $99.95 fee simply to acquire it followed by charges to the tune of $1.50 every time a user contacted a customer representative plus an additional $1.50 charge on top of any bank-issued ATM fees when the card was used to withdraw funds. The Kardashians eventually abandoned their prepaid card project amid media uproar regarding the fees.
Prepaid cards of all types have gained popularity in recent years as they provide an opportunity for teenaged consumers and other individuals not in possession of a credit card to be able to make purchases using plastic. Prepaid cards are especially favored by gift-givers around the holidays. According to data cited by Menendez`s office provided by the Mercator Advisory Group, the amount of money loaded onto prepaid cards nationwide is projected to soar from $60.4 billion in 2009 to $233.8 billion in 2012, an increase of 383%.