DURHAM, N.C. (5/24/12)—Consumer Financial Protection Bureau (CFPB) Director Richard Cordray announced a new rulemaking effort to address prepaid cards, and discussed a number of issues surrounding the use and issuance of those cards, at a Wednesday field hearing in Durham.
Improving the safety and transparency of prepaid cards and their providers will be two main goals of the CFPB's rulemaking effort, Cordray said in remarks delivered at the hearing. He noted that prepaid cards do not come with many of the same protections that are offered to users of traditional account-tied debit and credit cards. "That is why we are considering how best to extend protections to prepaid cardholders in the event that a card is lost or stolen, unauthorized charges are made, or a processing error results in an incorrect charge amount," he said.
The CFPB will collect public comment on prepaid cards, and also will examine the costs, benefits, and protections related to overdraft features offered on prepaid cards, Cordray said, and will analyze how some of the terms of a given prepaid card can be disclosed before a consumer buys a prepaid card. The CFPB is also adding more than 80 answers on prepaid card issues to its own database of frequently asked financial questions, which is hosted on consumerfinance.gov. "These new entries give consumers an overview of prepaid cards and help address questions about obtaining, reloading, and using prepaid cards," Cordray said.
Representatives from Premier FCU, Greensboro, N.C., Piedmont Advantage CU, Winston Salem, N.C., the Credit Union National Association (CUNA), and the North Carolina Credit Union League (NCCUL) were among those at the hearing.
CFPB Deputy Director Raj Date, Rep. David Price (D-N.C.), and North Carolina Attorney General Roy Cooper also spoke during the hearing, and Date moderated a prepaid card panel that featured comment from consumer groups, industry stakeholders, and financial experts.
Peidmont Advantage CU's Belinda Wilson said her credit union offers prepaid cards to meet member's needs and to offer consumer choice, and noted that the cards offered by her credit union have low up-front costs and fees, and provide adequate disclosures.
CUNA will analyze the CFPB request for comment, and will be issuing its own regulatory comment call shortly.