Congressmen Fight to Block CFPB Prepaid Card Limitations
Two Republican Congressmen in Georgia are fighting to put a stop to CFPB prepaid card limitations before they go into effect. Sen. David Perdue and Rep. Tom Graves say that the regulations could cause major problems for the prepaid card and electronic payment industries, but some opponents feel there could be a hidden motive behind their action.
The Consumer Financial Protection Bureau proposed the new rules last year in an effort to protect consumers from unfair prepaid card practices. The main purpose of the proposal was to limit losses when a prepaid card is lost or stolen and give consumers easy access to account information, but there were a number of other stipulations within the regulations.
The CFPB’s proposal was set to become official in October, but the Georgia Congressmen are trying to prevent that from happening. They are mostly concerned with the overdraft laws within the proposal, which put a cap on the amount of money prepaid card companies can charge their clients in overdraft fees.
Most prepaid card providers do not allow account overdrafts, but NetSpend does. NetSpend is run by a parent company called Total System Services, which operates out of Georgia. If the CFPB’s proposal becomes active, NetSpend could lose $80 million a year.
The FTC filed a complaint against NetSpend in November 2016 for misleading advertisements, but there was no fee amount tied to it. The CFPB’s rules, by comparison, would have a direct impact on NetSpend’s bottom line.