CFPB Urged to Require Better Disclosure & Protections For Prepaid Cards
Watchdog Holds Hearing Today on Prepaid Cards As Market Continues to GrowLive Stream of Hearing Available Online Today at Noon EDT at www.consumerfinance.gov
WASHINGTON, May 23, 2012 /PRNewswire-USNewswire/ -- Consumers Union, the policy and advocacy arm of Consumer Reports, called on the Consumer Financial Protection Bureau (CFPB) today to adopt new rules to protect consumers who rely on prepaid cards. The CFPB is holding a field hearing on Wednesday in Durham, North Carolina, on prepaid cards, which have become an increasingly popular alternative to traditional banking accounts in the U.S.
The CFPB will feature a live stream of the event online at www.consumerfinance.gov beginning at noon eastern on the 23rd.
An April Consumer Reports analysis of prepaid cards found that industry competition is beginning to help bring down fees, but fees aren't always disclosed up front and can still add up quickly. Moreover, prepaid cards offer weaker consumer protections than those provided by traditional debit cards.
"The prepaid card market has exploded in the U.S. but consumers still don't enjoy the protections they need to ensure they are getting a fair deal," said Michelle Jun, senior attorney for Consumers Union. "It's time for the CFPB to require clear disclosure of all fees in a simple format so consumers know the costs before they purchase a card. Prepaid cards should get the same strong protections as traditional debit cards so consumers have the peace of mind that their money is safe if their card is lost or stolen."
Many prepaid cards are now offering new features to enable consumers to establish credit files or help those with bad credit to rebuild their credit record. But Consumer Reports found that information from prepaid card transactions is not useful to help a consumer build a credit record. Consumers Union said that the CFPB or the Federal Trade Commission should monitor credit building claims made by prepaid card issuers to ensure consumers aren't being misled.
SOURCE Consumers Union