WASHINGTON (12/31/13)--Legislation that would restrict hidden fees charged on prepaid cards and increase protections offered to consumers of those cards was introduced earlier this month by Sen. Robert Menendez (D-N.J.).
The Prepaid Card Consumer Protection Act Of 2013 (S. 1867) has been referred to the Senate Banking Committee. The Senate is scheduled to begin its first work period of 2014 on Jan. 6.
Sens. Richard Blumenthal (D-Conn.) and Jeff Merkley (D-Ore.) are original co-sponsors of the legislation.
Menendez noted that prepaid card consumers can pay as much as $1,300 per year, with the average consumer paying about $340 per year in fees. These numbers were part of a Pew Charitable Trusts study.
In a release, the senator said his bill would:
Require prepaid card providers to disclose all fees prior to prepaid card purchase;
Ban the charging of overdraft fees, balance inquiry fees, customer service fees, inactivity fees, account closure fees and others on prepaid cards;
Ensure that consumers will get their money back if a prepaid card is lost or stolen;
Ensure that consumers will get their money back if the card company goes bankrupt;
Direct the Consumer Financial Protection Bureau to issue regulations within 12 months of enactment; and
Direct the CFPB to release a study within 12 months detailing the benefits prepaid cards offer consumers when compared with bank accounts or other financial options.
The CFPB plans to release a proposed rule on prepaid card products in the near future, and is also aiming to test consumer disclosures in connection with prepaid products. (See Dec. 5 News Now
item: CFPB Previews 2014 Regulatory Hot Spots.)