The Consumer Financial Protection Bureau (CFPB) announced its plan to expand consumer protection rules that apply to credit cards to many prepaid card products, including general use, open loop cards, tax refund cards, and payroll cards. This expansion will also encompass many of the mobile payment products currently available or in development, like Google Wallet and Apple Pay. The public will have 90 days to comment on the proposed rules.
Some of the new proposed rules include:
- Fraud or other unauthorized transaction liability is limited to $50 if the card or account is "registered."
- Consumers must have access to monthly statements to review balances, transactions and fees.
- Issuers must have an enhanced investigation and error resolution process.
- Limits on the bank's ability to impose overdraft fees, unless the consumer has opted in.
- Limits on the ability of lenders to withdraw amounts from a prepaid card.
- Greater upfront disclosure of fees to the end consumer
- General extension of credit card rules to prepaid cards
- Better access to card agreements for consumers and the CFPB
Most of the disclosures will be in the form of standard disclosure, similar to what consumers are accustomed to for credit card or bank statement disclosures.
Today's proposed rules are part of a series of moves by the CFPB to protect consumers that use prepaid cards. This summer, the agency began accepting complaints regarding prepaid cards. Meanwhile, in the fall 2013, the CFPB issued a bulletin to remind employers that the CARD Act requirements apply to payroll cards. In the spring of 2013, the agency partially preempted state laws that provided a shorter dormancy period for gift cards than the minimum five year expiration required CARD Act of 2009.
Estimates say that there will be a total of $100 billion loaded to some form of prepaid card this calendar year.