Network Branded Prepaid Card Association Asks Consumer Financial Protection Bureau To Protect Consumers But Not Stifle Access To General Purpose Reloadable Cards

MONTVALE, N.J., July 24, 2012 /PRNewswire/ -- The Network Branded Prepaid Card Association (NBPCA) submitted a comment letter in response to the Consumer Financial Protection Bureau (CFPB) Advance Notice of Proposed Rulemaking regarding general purpose reloadable (GPR) cards. Understanding the goal of the CFPB is to level the regulatory playing field between banks and non-banks, NBPCA urged the agency not to enact overly burdensome legislation, which limits consumer access to these popular financial tools. GPR cards are available in more than 200,000 retail locations, banks and other locations convenient to consumers in all neighborhoods, including areas not serviced by traditional banks.

"NBPCA appreciates the opportunity to provide our input, data and commentary on this important issue. The demand for general purpose reloadable cards is high among all demographic groups, especially young adults, who choose the cards because of their ease of access, convenience and lower costs over traditional checking. We hope the CFPB will issue regulations that not only continue to protect consumers but also don't inhibit the innovation within this relatively young and fast growing industry," remarked Kirsten Trusko, President and Executive Director, NBPCA.

In its comment letter, NBPCA noted it supports, with certain exceptions, Regulation E coverage as it applies to payroll cards being extended to GPR cards that serve as a substitute for bank accounts, if the Bureau determines GPR cards should be subject to Regulation E. Many NBPCA members already extend Regulation E coverage (as it applies to payroll cards) to their general purpose reloadable cards.

Regarding disclosure of fees, NBPCA indicated it believes general purpose reloadable card fees should be clearly and conspicuously presented to consumers both before and after purchase so they can comparison shop. But NBPCA also noted that determining the appropriate placement of disclosures may be difficult given the small size of the plastic cards and the variety of different distribution channels used, including mobile, to purchase and/or deliver GPR cards to consumers.  NBPCA endorsed the concept of a "fee chart," and currently some of its members are implementing, on a trial basis, the proposed fee box developed by the Center for Financial Services Innovation (CFSI).

"We know general purpose reloadable cards not only serve the need of a wide range of individuals, but also remain a top choice among consumers over other options. An NBPCA member conducted a survey of 9,000 cardholders in May 2012 (the "2012 NBPCA Member Cardholder Survey") that concluded 74% to 80% of the GPR cardholders surveyed were satisfied with the particular card and that 66% to 73% would recommend the card to a friend.  Such high satisfaction levels suggest that the industry has done a good job of promoting and protecting consumers' interests," added Trusko.

Among other questions addressed in its response letter, NBPCA agreed with the CFPB that FDIC pass-through insurance should not be required for GPR cards as long as there is clear disclosure, noting some non-bank issued products offer similar protections. The association also emphasized consumers should have access to the same features as checking account customers such as overdraft protection on an opt-in basis with the same protections.

With respect to savings accounts, NBPCA noted savings accounts currently offered to general purpose reloadable cardholders by card issuers should remain optional and not mandatory, as the costs associated with offering these accounts is high due to the low balances and usage to date of the feature. NBPCA also supports the continued exploration of ways in which a GPR cardholder can use credit-building programs, on an opt-in basis with terms clearly disclosed, to help them when applying for credit.

As the industry's leading trade association, NBPCA's goal is to promote the innovation, growth and success of general purpose reloadable cards in a manner that meets the Bureau's goals of safety and transparency.  NBPCA members not only seek to meet consumer product demand, but also strive to achieve the highest level of consumer confidence, satisfaction and trust in their products.

About the NBPCA

The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade association that seeks to educate, advocate, protect and promote on behalf of network branded prepaid debit cards and represents the common interests of the many types of companies who come together to deliver the wide variety of prepaid products. For additional information, visit www.NBPCA.org.

SOURCE Network Branded Prepaid Card Association (NBPCA)