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This act will eliminate some of the most egregious hidden fees and let consumers know what the fees are before they buy the cards. It will also let consumers get their money back if the cards are lost, stolen, or the company goes bankrupt. As it stands now, if the prepaid card is lost, stolen, or the company goes bankrupt, all monies on that card may be gone.
“This season, its hidden fees that are making for a Blue Christmas,” said Menendez.“Unsuspecting consumers are finding out the hard way that prepaid cards often give you much less than the dollar amount you load onto them thanks to unnecessary fees. We need to ensure that families who rely on prepaid cards are not surprised by hidden charges."
“Consumers need to be very careful about using prepaid cards, because many of them are riddled with fees that add up quickly,” said Chuck Bell, Programs Director of Consumers Union, the publisher of Consumer Reports. “Prepaid cards also have weak financial protections that could leave consumers vulnerable to losing their money, if their card is lost or stolen.”
“Now that prepaid cards are becoming increasingly popular, Congress must act to rein in the high fees, and make sure consumers get the protections they deserve,” Bell said. “We commend Sen. Menendez for his leadership in introducing this important legislation, which we hope will be swiftly enacted by Congress.”
“NJPIRG, New Jersey Public Interest Research Group is pleased to join Senator Robert Menendez today as he continues his longstanding work to protect consumers in the financial marketplace. As more consumers buy reloadable prepaid cards – whether for the convenience, or because they are un-banked due to the recession caused by the Wall Street banks – it is critical that those consumers have consumer protections including disclosures up front and a ban on unfair fees. Senator Menendez's bill will provide these and other important consumer protections.” said Gideon Weissman, NJPIRG Program Associate.
This is not Senator Menendez's first attempt at enlarging the fine print on prepaid cards. This latest effort comes at a time when the use of prepaid cards is booming. According to an analysis by Mercator Advisory Group, the amount loaded onto “open loop” prepaid cards will increase 383 percent between 2009 and 2012, from $60.4 billion to $233.8 billion. Senator Jeff Merkley (D-OR) also co-sponsored the legislation.
THE PREPAID CARD CONSUMER PROTECTION ACT
• Requires full disclosure of all fees before the consumer buys the card, including a wallet-sized summary of all fees and a toll-free telephone number for customer service
• Limits on the types of fees that can be charged, including a ban on overdraft fees, balance inquiry fees, customer service fees, fees for inactivity, account closure fees, and other types of fees
• Consumer protections for prepaid cards such as (1) Regulation E protection against loss or theft (so that if you lose the card or it’s stolen, you’ll still get your money back) and (2) FDIC insurance to protect consumers’ money if the card company goes bankrupt. Debit cards already have these consumer protections, but prepaid cards don’t.
• The Consumer Financial Protection Bureau and the FDIC would issue regulations within 9 months of enactment
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