NAPERVILLE, Ill. (8/29/13)--Illinois Gov. Pat Quinn Monday signed SB 1829, legislation that establishes a basic set of disclosures that must be furnished on general-use reloadable prepaid products. The Illinois Credit Union League took a key role in drafting and passing the law.
The disclosures will be provided to consumers on a pre-purchase basis, and on and with the cards.
"If there is going to be consumer legislation addressing general-use reloadable prepaid products, it should be done in a manner that provides meaningful basic disclosures to cardholders, but generates no additional burden to issuers of the products," said Stephen Olson, ICUL executive vice president and general counsel. "SB 1829 nicely addresses that balance by identifying disclosures commonly provided by many issuers today in the marketplace."
The cards operate like traditional debit cards but are not tied to a checking account. Instead, they are purchased with an amount loaded on the card and allow the purchaser the option of subsequently adding funds to the card.
After negotiations with the Consumer Protection Division of the Illinois Attorney General's office, ICUL led a working group coalition to draft and seek passage of the legislation. The coalition included the Community Bankers Association of Illinois, the Illinois League of Financial Institutions, and the Illinois Retail Merchants Association, and Visa, MasterCard and American Express.
The bill provides guidance to reloadable pre-paid debit card issuers in Illinois until the Consumer Finance Protection Bureau declares regulatory guidance under the federal Electronic Fund Transfer Act.
The legislation is important to ICUL and ICUL Service Corp. (LSC), its credit union service organization, which offers prepaid products as part of its suite of services and programs. Cathy Pettis, LSC senior vice president, served as a prime contact in the negotiations.
Since general-use reloadable prepaid cards were exempted from the federal Credit Card Accountability Responsibility and Disclosure Act, it was important that any set of required disclosures reflect and be consistent with marketplace practice, ICUL said. Pettis helped ensure that this was achieved, said the league.