I’m amazed that prepaid debit cards aren’t more heavily regulated than they are now. That’s about to change.
The Consumer Financial Protection Bureau is set to unveil some rules for prepaid products and is currently holding a hearing in Durham, North Carolina to discuss some of these changes. It’s said that the new rules wouldn’t involve controlling the fees, as one would expect, but institute similar credit protections that customers get on credit cards. For example, companies would have to reimburse customers for unauthorized charges and do better with security.
Why the scrutiny? Prepaid cards are exempt from the Durbin amendment, which put caps on merchant fees, and were overlooked by Dodd-Frank. As you can imagine, banks were pushing these more given less regulation.
I’d like to see some limits on fees. A lot of folks use prepaid debit cards because they’re part of the unbanked or they are low income. The fees may nominally look small, a few bucks here or there, but they’re enormous on a percentage basis.