Prepaid Cards Face New Regulations This Fall
The Consumer Financial Protection Bureau will be establishing new rules this fall to improve the prepaid card industry. This is the first time the federal government has actively attempted to regulate this market, which has long been unpoliced due to loopholes in credit and debit card laws.
Under the new ruling, prepaid card providers will be required to have more detailed fee disclosures in their card agreements. Consumers will be given easier access to their account information, and card providers will be monitored to resolve account errors efficiently.
Another benefit to come with the new regulations is a limit on the amount of monetary loss consumers can experience if their cards are lost or stolen. Prepaid card provider RushCard recently paid $19 million to its customers for losses resulting from a technical glitch. With the CFPB’s ruling, consumers will be better protected in situations like this, which will ultimately improve their experience with their prepaid cards.
The CFPB may also be changing the way prepaid providers handle overdrafts. Rather than allowing overdrafts for a fee like a bank, prepaid card providers may be asked to limit overdrafts like a credit card provider. Before that rule goes into effect though, the CFPB wants to potentially make changes to the way bank overdrafts work by requiring banks to check a person’s credit worthiness before allowing that feature on their account. If this system works well for banks, the CFPB may make a new plan for prepaid cards.