Breaking News – Sen. Warner Introduces Bill Targeting Prepaid Card Fee Disclosures (Jan. 10, 2014)
Expected by the payments industry for weeks, U.S. Sen. Mark R. Warner (D-Va.) yesterday introduced a bill calling for banks to “more fully disclose the hidden fees often charged for the use” of prepaid cards.
“[Prepaid] cards aren’t subject to the same kinds of consumer protections as other types of credit cards and gift cards,” said Warner, a member of the Senate Banking Committee. “It’s important that young people and people without credit history or access to traditional banking tools have access to prepaid cards; but, we can’t let the technology outpace smart consumer protections.”
Warner’s Prepaid Card Disclosure Act of 2014 would direct the Consumer Financial Protection Bureau (CFPB) to require financial institutions to provide fees associated with their cards in an “easily understood table, clearly and conspicuously displayed to the consumer prior to purchase, describing the amount and description of each fee that may be charged.” The bill also requires a toll-free phone number and Website to be clearly indicated on the card for consumers to obtain additional information about fees. The legislation permits disclosure via QR code or barcode.
“The bill was in line with expectations,” NBPCA Spokesperson Crystal Wright tells Paybefore. “We have a good relationship with the senator. He understands that prepaid cards are an important tool for consumers to access and store their money. We knew he wanted to focus on disclosure, and the good news is that the industry already has been working a lot around disclosures, including some leading practices from the NBPCA.”
The Pew Charitable Trusts commended Warner in his news release for the legislative measure. “Pew’s research shows that inconsistent disclosures make it very difficult for consumers to understand the terms and fees associated with each card,” said Susan Weinstock, Pew’s director of safe checking research. “The growing number of consumers turning to prepaid cards as a way to manage their money underscores the need for reform.”
Unlike Sen. Robert Menendez’s bill, which was introduced in December, Sen. Warner’s bill does not include any restrictions on the types of fees that prepaid companies can charge. Wright says that’s a positive.
“Consumers do a great job of deciding what features they want to pay for,” she says. “Competition also has been driving fees down. The latest Bretton Woods research shows that most consumers who use a prepaid card as their primary financial tool pay less than $7.50 a month.”