Detective fiction has a thing or two to teachus about prepaid regulations. Consider this assessment of lawenforcement by private eye Phillip Marlowe to his cop buddy BernieOhls from The Long Goodbye by Raymond Chandler.
“You’re a damn good cop, Bernie, but just thesame you’re all wet. In one way, cops are all the same. They allblame the wrong things. If a guy loses his pay check at a craptable, stop gambling. If he gets drunk, stop liquor. If he killssomebody in a car crash, stop making automobiles. If he getspinched with a girl in a hotel room, stop sexual intercourse. If hefalls downstairs, stop building houses.”
In many ways, prepaid is treated much the same. If there is moneylaundering, then stop prepaid. If a fast food manager gives anemployee bad (and possibly illegal) choices on how to receive theirwages, then stop prepaid. If someone electronically steals asenior’s social security check, stop prepaid!
The problem with these examples, all of which have shown up in thepress lately, is that they blame the wrong thing. Prepaid cards arenot the cause of these events. Criminals laundered money before theprepaid card existed. Managers have given low level employees rawdeals before prepaid. And social security checks were stolen out ofmailboxes long before prepaid came on the scene.
Prepaid cards give cardholders an additional tool for managingtheir money. In some cases, the cards may be used for budgeting, inothers for receiving government benefits or a paycheck, in somecases they might stand in for a checking account. All of thesecases are different and one size does not fit all when it comes toprepaid cards. Not all prepaid cards are a good deal, but thatdoesn’t mean all prepaid cards are a bad deal.
When looking to regulate prepaid, we need to make sure that we arenot regulating the wrong thing. Only by understanding the manyapplications of prepaid can we understand where the real problemslie. For example, if a manager violates payroll laws, then thatdoesn’t mean that we need to regulate payroll cards, it means thatwe need to enforce payroll laws. If prepaid cards end up beingregulated out of existence, then the regulations will likely hurtthe people they are trying to help.