An article publishedby Reuters describes the Democratsmisguided effort to cap fees on prepaid products ignoring theoverwhelming evidence that consumer costs increase as legislatorseliminate transactional fees (as seen with Durbin Amendment and RegE changes).
“On Friday, a group of Senate Democrats introducedlegislation that would limit the types of fees that could becharged on prepaid cards.”
Incredibly, the example used to indicate the need for thisregulation, the Kardashian Kard, follows the very model theselegislators will force on all prepaid products. The Kardashian Kardrequired a large upfront annual fee ($90.00), but then chargedno transactional fees for the year.
These legislators are now forcing a version of theKardashian pricing model on all prepaid card products when theystate “We need to ensure that families who rely on prepaid cardsare not surprised by hidden fees and are not hit with fees that aretotally unnecessary,” Democratic Sen. Robert Menendez of NewJersey, who introduced the bill, said in a pressrelease.
So what Senator Menendez’s bill recommends is that allprepaid cards follow the Kardashian Kard model: Eliminatetransactional fees and replace them with a higher single-ratecost.
Of course this legislation eliminates a cardholdersability to control costs. Rather than a cardholder being able toavoid high cost transactions to keep costs low, this legislationwill force issuers to charge higher upfront fees to cover thesetransactional costs for all cardholders – even those that don’t usethem.
This legislation is guaranteed to increase the upfrontmonthly fees charged to all cardholders, which in turn will benefitonly those cardholders that make the most intensive use of theseexpensive transactions, such as ATM withdrawals.
In short, Senator Menendez is forcing a version of theKardashian Kard on all America.