Prepaid Debit Disclosure Bill Introduced in Senate
Citing the reported large numbers of prepaid debit cards which were used to make purchases during the holiday season or were gifts themselves, Warner argued when introducing the Prepaid Card Disclosure Act of 2014 that the cards' explosive growth demanded greater consumer protections.
“Greater transparency of fees in a consistent way will empower consumers to make more informed decisions before purchasing or using one of these prepaid products,” Warner, a majority party member of the Senate Banking Committee, said. “These reloadable cards are popular as gifts, and many parents send their children off to college with them. As they become more prevalent in our economy, it just makes sense that consumers should have access to the same information that we require with gift cards and most major credit cards.”
Warner cited the confusion which can exist because prepaid cards appear very much like standard credit cards, in that they carry the logos of the major card brands but they often don't carry the same consumer protections. And, the cards usually have a whole different set of fees, he said.
The legislative announcement was critical of issuers that impose activation fees, and many include monthly maintenance fees, too. Other issuers charge consumers 75 cents for checking the account balance, $1.75 to make a withdrawal, and as much as $5 per month for an inactivity fee. Some issuers, Warner noted, even charge overdraft fees of up to $25.
The bill would mandate the Consumer Finance Protection Bureau promulgate rules for standard disclosures of prepaid card fees that would include an easily understood table, clearly and conspicuously displayed to the consumer prior to purchase, describing the amount and description of each fee that may be charged.
The bill also allows disclosure through a QR code or barcode, which would allow consumers to get real-time fee updates via their smart phone, and would require a toll-free telephone number and website to be clearly indicated on the card where consumers could obtain further fee information.
A list of additional Senate sponsors has not yet been release.