With more Americans using prepaid cards and products, the Consumer Financial Protection Bureau is today proposing rules on prepaid products that would formalize many consumer protections already offered by banks that provide these products. “Many people choose prepaid products as a useful alternative to a traditional checking account,” ABA SVP Nessa Feddis commented. “These rules formalize the protections that banks’ prepaid customers already enjoy.”
The proposal would require prepaid issuers to provide periodic statements or
make account information available online for free. After a customer registers
a card, issuers would also be required to resolve account errors promptly and
protect customers against unauthorized or fraudulent transactions --
protections that customers already enjoy due to card network rules.
The proposal also includes a standard set of two disclosures -- one short and
one longer -- detailing key account information and fees, plus online posting
of account terms. The proposal also includes rules for prepaid products that
allow overdrafts and other credit products.
“The disclosure requirements appear consistent with many of the banking
industry’s recommendations, and the consumer protections regarding unauthorized
transactions and billing disputes seem to reflect current best practices,”
Feddis added. “ABA will review the proposed rules closely to ensure they
protect bankers’ ability to offer the convenient, affordable prepaid products
customers want.” Comments will be due 90 days after publication in the Federal
View the model disclosures.