CFPB Field Hearing Regarding Prepaid
by Lisa Bonelli
On Thursday, November 13th, the CFPB conducted a hearing on proposed regulatory changes to prepaid cards. Participants on the panel included representatives from the CFPB, the President of GreenDot, Steve Streit, and the Head of US Prepaid at Visa, Cecilia Frew.
The CFPB has proposed a rule that will tighten requirements for issuers of prepaid cards. While there are some rules in place for certain pre-paid products such as Payroll, minimal rules are in place for general purpose prepaid cards. It is anticipated that there will be approximately $100 billion loaded on Prepaid products next year.
The panel discussed how Prepaid has been traditionally used by the unbanked population in lieu of checking accounts, but the cards lack the protection of these accounts which are governed by Regulation E. Currently 90 million Americans are unbanked.
One representative also mentioned the increasing population using Prepaid cards, in addition to checking accounts, to manage spend. The proposed regulations would apply to card transactions as well as digital cards to give consumers access to e-mobile solutions.
The regulations proposed the following changes. Timing was not discussed.
- Key terms to be noted on the outside of packaging so consumers can see terms before choosing a card
- Clear disclosures be provided to consumers
- Forced monthly statements so consumers are aware of their balance
- Late fees must be proportional to balance on the card
- Consumers should be given 21 days to repay any debt
- FDIC backing to cover loss of funds
- Removal of overdraft fees
- Protections against loss of card, theft and unauthorized transactions
You can learn more HERE.