STATEMENT: CAP’s Consumer Finance Director on CFPB Rule for Prepaid Accounts
Washington, D.C. — Today, the Consumer Financial Protection Bureau, or CFPB, announced a final rule for prepaid accounts that will go into effect next year. Center for American Progress Director of Consumer Finance Joe Valenti released the following statement:
Over the past decade, the use of prepaid cards—which can be found on store shelves everywhere and are even used to pay workers and distribute public benefits—has grown rapidly, reaching 9.2 billion transactions in 2012. These cards offer many of the same features as bank accounts, and until now, an incomplete and inconsistent set of regulations has governed their use.
The final rule announced today by the CFPB goes a long way to ensure that no matter which cards or digital prepaid accounts are in consumers’ wallets, they can have confidence that their funds are secure and fees are fair. Issuers of prepaid cards must utilize new disclosures that illustrate up front on the packaging the fees associated with a card so that customers choose the right product for their needs. Consumers are now protected from fraud or unauthorized use, just as their funds on other cards are protected. Costly overdraft features are now prohibited, and strong standards must be in place for any line of credit connected to a card.
As illustrated by last year’s RushCard outage that locked out 132,000 prepaid card holders from accessing their funds—as well as the recent discovery of two million unauthorized banking and credit accounts opened at Wells Fargo—Americans deserve a financial regulator that creates and enforces a level playing field in the financial marketplace. Today’s final rule is another milestone for an agency that has made defending families’ hard-earned dollars a priority.
- Making Prepaid Cards Safer, More Transparent, and More Affordable by Joe Valenti
- Infographic: Mobile Banking by the Numbers by Joe Valenti and Pete Morelewicz
- The End of Cash: The Rise of Prepaid Cards, Their Potential, and Their Pitfalls by Joe Valenti
For more information or to speak with an expert, contact Allison Preiss at email@example.com or 202.478.6331.