Last week’s release of the new prepaid rules form the Consumer Financial Protection Bureau has prompted a wave of industry press coverage. There has been something of a charm offensive by the CFPB about the new protections that the rules are supposed to bring to cardholders, but network rules have been place for some time that offer these protections.
The Consumer Financial Protection Bureau finalized a rule last week that limits losses when funds are stolen or cards are lost; requires mistakes to be investigated and resolved; and provides free, easy access to account terms and balances.
“This rule closes loopholes and protects prepaid consumers when they swipe their card, shop online or scan their smartphone,” bureau Director Richard Cordray said. “And it backs up those protections with important new disclosures to let consumers know before they owe.”
A review of cardholder agreements for GPR cards shows that limited liability is already in place, and they already strive to provide easy access to account terms and balances. Many prepaid cards offer texts after every transaction to let cardholders know their running balance. Prepaid card providers want to make sure that cardholders know their balances and are protected because the only way providers make money is if cardholders use their cards. Uncertainty around balance or safety could lead cardholders to abandon programs.
The 1689 pages doubtlessly carry good intentions and codify some protections, but it is important to remember that most prepaid card holders had many of these protections even before the rules were finalized.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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