Prepaid Debit Card Reviews, Complaints, Etc

Blog

Consumer Financial Protection Report: Mishandling Credit Report Errors, Hassling Consumers and More

Harassing phone calls. Credit report errors. Payday loan company employees showing up at a customer’s workplace demanding money. These are just some of the more troubling findings in a recent report from the Consumer Financial Protection Bureau (CFPB), which was set up in the wake of the financial meltdown to police financial products and services.

The latest Consumer Financial Protection Bureau report highlights the agency’s regulatory supervisory activities between November 2013 and February 2014. According to the CFPB, which has a nationwide network of examiners whose job it is to review how well financial services companies are complying with the law, credit bureaus are not always properly handling credit report errors. This is important for a consumer’s financial protection because mistakes about how someone repays their debts can hurt their chances for qualifying for a mortgage or car loan or even nix their chances of landing a job.

Although the CFPB didn’t name the credit bureaus in its report, it did note that at least one had not been properly processing documentation provided by consumers seeking to dispute an error on their credit report. The law allows consumers to provide documentation to correct credit report errors, information that the credit bureaus are supposed to forward along to creditors so that a dispute can be resolved. Because this was not happening, the CFPB issued a warning to the non-compliant credit bureaus.

The CFPB also found some debt collectors egregiously violated the Fair Debt Collection Practices Act (FDCPA). The FDCPA is an attempt to rein in abusive practices and harassment by companies seeking to recoup money loaned to consumers. Yet the agency found that constraints imposed by the FDCPA were routinely ignored. For instance, one unnamed company made around 17,000 phone calls to consumers outside hours allowed by the FDCPA. “In addition, the entity also violated the FDCPA when it repeatedly contacted more than one thousand customers, contacting some consumers as often as 20 times within two days,” says the report.

Additionally, the FDCPA does not permit debt collectors to make false or misleading statements in their efforts to collect money they’re owed. Investigators from the CFPB discovered one company was routinely filing lawsuits riddled with factual inaccuracies about how much a consumer owed. “When the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims,” says the report.

The CFPB also cited one payday loan company for sending employees to the workplace of consumers in order to collect debts. This was occurring despite the fact that consumers had specifically requested that it stop and the practice being in violation of the Dodd-Frank Act.

June 18, 2014
Visa Attacks Prepaid Fee Confusion

It’s getting harder and harder for prepaid card issuers to be sneaky about their fees. Earlier this year the Pew Charitable Trusts issued a report detailing the lack of uniformity when it comes to prepaid fee disclosures and proposed a model disclosure box to make it easy for consumers to compare the fees associated with different products. Soon after that announcement, Chase declared that its Chase Liquid Prepaid Card would adopt Pew’s disclosure suggestions.

On June 3^rd, Visa decided to weigh in on the prepaid fee disclosure issue. Working in conjunction with Pew and the Center for Financial Services Innovation, Visa announced that it has developed an easily understandable designation for consumers to look for in order to know quickly whether a prepaid card meets certain standards related to fees, disclosure and benefits. Prepaid card issuers that qualify can include a seal on their packaging and marketing materials that indicate their compliance with certain criteria. Think of it as a prepaid version of the “fair trade” sticker that graces coffee packaging.

“We felt it was important to go beyond current requirements in the marketplace and bring transparency to this growing product area,” says Ryan McInerney, president of Visa Inc. “This Visa designation will signify a new level of simplicity, protection and opportunity, enabling cardholders to confidently manage their spending every day.”

In order to qualify for the Visa designation, prepaid cards must meet a variety of standards such as offering a flat monthly fee that includes all day-to-day uses for the card. In other words, there are a lot of things that prepaid card issuers can’t charge for, such as point of service (POS) cash back, in-network ATM transactions, PIN or signature transaction fees and customer service or overdraft fees.

Additionally, qualifying cards must also offer specific consumer protections. Among other things, to receive a seal of approval cards have to include FDIC insurance, dispute resolution rights and Visa’s zero liability coverage.

According to Pew’s Susan Weinstock, who directs the group’s consumer banking initiatives, Visa’s move is important. “Visa is taking an important step forward by acknowledging the importance of clear disclosures and consumer protections,” she says. “It’s particularly encouraging that Visa is not allowing overdrafts on these cards, in light of our research on consumer prepaid card use.”

June 5, 2014
American Express -Sponsored Movie Spent Premieres

Life outside the financial mainstream is getting the Hollywood treatment. On June 4^th, the American Express-sponsored documentary, Spent: Looking for Change, which profiles the challenges and frustrations of those Americans who lack traditional bank accounts and credit cards, premiered in Los Angeles and online.

Executive produced by Davis Guggenheim, who won an Academy Award for An Inconvenient Truth, and directed by Derek Doneen, Spent is available for free on a variety of websites, including SpentMovie.com as well as on the American Express YouTube channel. Simultaneous to its online availability, a screening of the film and a question and answer session with Guggenheim and Doneen took place at the Hammer Museum in Los Angeles.

The wide availability and zero cost to access Spent is a sharp contrast to the families and individuals who are profiled in the film. Lacking access to checking accounts and other mainstream financial services, the Americans highlighted in Spent are forced to pay high fees – at check cashing and payday loan outlets, for instance – and wait in long lines to do simple tasks like pay bills and cash paychecks. American Express estimates that about 25 percent of American households are not well-served by the current financial system and that those families spend an average of 10 percent of income on fees – about the amount the typical American family spends on groceries.

The film is narrated by Tyler Perry, who grew up in poverty in New Orleans and spent time living in his car as he worked to launch his career in TV and film. “I know about this issue first-hand and how expensive it is to not be a part of the mainstream financial system,” he says. “Growing up the way I did, there was no education about how important it was to be financially responsible. That’s why I felt compelled to participate in this film – to help educate others and advocate for better options.”

As a sponsor of the film, American Express is eager to highlight what it believes are its own superior options for the millions of people outside the financial mainstream. In particular, American Express is now selling both its ultra low-fee prepaid card, Serve, and itschecking account alternative account, Bluebird, at Walmart and other chain retail stores nationwide. With low (and sometimes no) fees, both products provide those who are unbanked, or simply unhappy with the available options, a new choice.

The film is part of a larger effort by American Express to not only shed light on the problems with the current financial system but to also promote change – including the development of new technologies and products that inexpensively meet the financial needs of everyone. “With the debut of Spent: Looking for Change, we hope to spark a national dialogue about re-imagining financial services as we know it today,” says Dan Schulman, who heads up the American Express Enterprise Growth unit. “Change is possible and we believe financial exclusion is a solvable problem, but it’s going to take lots of people working together, raising awareness, and investing in initiatives that help to create better, more affordable financial solutions for everyone.”

June 5, 2014
JPMorgan Launches Financial Solutions Lab

American Express just got a little competition in its efforts to appeal to those living outside the financial mainstream. On May 29^th, banking giant JPMorgan Chase & Co. announced that it has committed to invest $30 million to create the Financial Solutions Lab.

A collaboration with the Center for Financial Services Innovation, the new Financial Solutions Lab will tap the expertise of entrepreneurs, non-profits and academics to develop products and technologies to help people save more money and build better credit. The new venture is geared towards helping those who are not fully served by the current financial system. “Living outside the financial mainstream puts financial security further out of reach for one out of every four American households that rely on high-cost, non-bank services to manage their finances,” says Bruce McNamer, the CEO of the JPMorgan Chase Foundation. “The Financial Solutions Lab will bring together the best and the brightest to identify innovative solutions that help consumers increase savings, improve credit and build assets.”

Buttressing its decision to launch the Financial Solutions Lab, JPMorgan Chase and the University of North Carolina at Chapel Hill also released a white paper that illustrates the need for improved financial services. For instance, the paper notes that less than 10 percent of working American families are financially prepared for retirement while more than half do not have an adequate emergency fund. The research also shows how important savings can be as a vehicle for upward mobility. Indeed, 71 percent of kids born to low-income parents who managed to be big savers were able to move out of the bottom income quartile.

This new JPMorgan Chase initiative will, among other things, host competitions that encourage social entrepreneurs to devise ways to help encourage saving and credit building. In doing this, JPMorgan is echoing American Express’s well-publicized efforts to provide solutions to millions of so-called unbanked Americans. Besides its checking account alternative Bluebird and Serve prepaid cards, American Express sponsored a new documentary film, Spent, which shines a light on the difficulties and expense those who don’t have bank accounts or credit cards face to do simple tasks like pay bills and cash checks.

June 4, 2014
Which Plastic Is the Best? Debit Cards, Credit Cards or Prepaid Cards?

Long gone are the days when credit cards were the only choice for people in need of plastic. Here are some other options:

Imagine walking into a restaurant and being told that a menu is not needed because there’s only one dish being served. From time to time that happens — set price, or prix fixe, menus pop up at fancy restaurants and around holidays — but for the most part it would prompt many of us to head for the door. We all like choices.

Major financial institutions, like most restaurants, understand the need to offer different card offerings to meet the varied circumstances and tastes of their customers. As a result, many now offer three card options beyond traditional credit cards. Consumers can choose between secured credit cards, conventional debit cards and prepaid debit cards. Banks are tailoring their cards to meet the needs of different market segments, offering secured cards to young people and others eager to build good credit, issuing conventional debit cards to most checking account customers, and providing prepaid services to those who do not have bank accounts or who have other reasons for wanting prepaid cards. The choices assure almost all consumers can enjoy the safety and convenience of shopping or paying bills with bank or brand imprinted cards. Here’s a bit more about each option.

Secured Credit Cards

An inevitable part of life is to face financial stresses and setbacks. It just happens. And that has especially been the case over the past few years, as the economy has limped along and many have had to contend with lost jobs, lower wages and, often, a resulting damaged credit history. Secured credit cards are intended for people who have had some financial difficulties and thus have trouble qualifying for the sort of unsecured lines of credit typical with a standard credit card. In contrast with standard credit cards, credit building cards or secured credit cards require you to pay a deposit in exchange for borrowing privileges. Think of it this way: rather than the $5,000 or $10,000 limit many credit card companies grant their customers, secured credit cards generally set your limit at whatever amount you can deposit into your account upfront. So, if you open a secured credit card account with $1,500, then you have a credit line of $1,500.

Not all cards have such a strict formula for establishing credit lines, especially after you’ve proven that you reliably pay your bills. Qualifying standards are relatively lenient because that upfront deposit acts as collateral. In exchange, however, you face strict payment requirements and risk substantial penalties and interest hikes if you fail to use your card responsibly. The best secured cards require less than $40 in annual fees and charge less than 18 percent interest. The cards also typically assess late charges. The good news, however, is that prudent use of a secured credit card can help rebuild our your credit rating and help you qualify for an unsecured card (a “normal” credit card).

Conventional Debit Cards

“Free” checking is very seldom completely fee-free. When you open a conventional checking account, the majority of banks issue a debit card as part of their service. You may use a debit card to withdraw funds directly from your checking account on those occasions when you cannot write checks. You can also take advantage of online shopping and bill-paying services, which make spending and tracking your money far easier than writing out checks and combing through your register to balance your account. While conventional debit cards combine the convenience of a credit card with the security of a check, they can often come with fees. More and more banks are charging their customers monthly fees, such as overdraft charges, when they opt to use a debit card.

Prepaid Debit Cards

Prepaid debit cards offer the same convenience as credit and conventional debit cards without the risk of overspending. That’s because prepaid debit cards require consumers to deposit, or load, money into their account upfront. And the amount of money loaded onto the card is all that you can spend. Most prepaid debit cards require no application, and many charge limited or no monthly fees when you meet minimum monthly loading requirements. An increasing number of major financial institutions offer prepaid debit cards that carry all the same consumer protections as their conventional cards, and some are now including Federal Deposit Insurance Corporation (FDIC) protection as well. Consumers, however, must compare prepaid debit cards, because many providers still charge “maintenance” and “inactivity” fees. Mitchell Weiss, co-founder of the University of Hartford’s Center for Personal Financial Responsibility, tells U.S. News & World Report, “These cards prey on the under and unbanked consumers, who mistakenly believe they’re more economical than having a traditional checking account.” Fortunately, we make is simple to compare cards using our in-depth prepaid card analysis.

How to Choose a Card

Because they submit regular monthly reports to the three major credit bureaus, secured credit cards help you establish, restore or improve your credit. Tied to your checking account, conventional debit cards make routine transactions more convenient. Retailers and service providers typically accept debit cards even when they do not accept personal checks, and conventional debit cards make online shopping easy. With most conventional debit cards, however, you run the risk of overdraft penalties. For many families, prepaid debit cards can be a good choice, because they offer the convenience of credit and conventional debit cards while they make sure you stay on your budget. If you want to shift your family to a “cash only” economy, prepaid debit cards can be a good step in that direction.

No single card is the best choice for everyone. Your best choice depends on your financial situation and objectives. Many credible online sources provide tools for comparing cards and calculating which best satisfies your needs. And picking a card doesn’t have to be an either-or proposition; many families choose to carry and use one of each.

Originally posted on Huffington Post

May 30, 2014
Accenture survey: Banks Face Big Threat

North American banks that don’t clue in that their competitors now include companies like PayPal, T-Mobile and even the US Postal Service could be facing big trouble. That’s the conclusion of a recent survey and analysis by the consulting companies Accenture titled, “The Digital Disruption in Banking: Demons, Demands, and Dividends.”

The Accenture survey, which was based on feedback from around 4,000 retail banking customers in the US and Canada, found that evolving technologies and changing consumer attitudes pose real dilemmas to traditional banks. Accenture found that although almost 40 percent of US customers have been with their current bank for a decade or more, a host of factors shows that now is not the time for banks to assume their customers aren’t looking for better options.

For instance, over one quarter of those surveyed by Accenture said they would consider a branchless digital bank if they opted to leave their current bank. Not surprisingly, the number of younger people who see no reason to visit a branch is high, with 39 percent of those between the ages of 18 and 34 saying they would consider all digital banking.

Perhaps even more worrying for traditional banks is the fact that almost three-quarters of US customers said they consider their relationship, such as it is, with their bank to be “transactional.” In other words, the bond between customers and banks is paper-thin, which makes two of Accenture’s other findings hardly surprising. More than half of the customers asked said they want their bank to proactively suggest products and services that can help them meet their unique financial needs. Half would also be interested in an analysis of their spending that was future focused and available in real time.

The Accenture survey also asked bank customers what companies they would consider as financial service providers. This is not merely an abstract question either, given that T-Mobile has launched a prepaid debit card and digital wallet and Walmart now has a partnership with American Express in which it sells the AmEx Serve prepaid card and the Bluebird checking account alternative. Topping the list of companies respondents would consider banking with – not all of them actually offer financial services – are Square, PayPal, T-Mobile, Costco, Apple and Google.

Being a consulting company, Accenture is also in the business of providing solutions to the problems big companies face. Their answer to the threat faced by big banks has three parts. It includes making the customer experience seamless, regardless of whether someone is making a transaction in a branch or digitally. The second part involves extending a bank’s so-called “ecosystem” by offering more services to customers. And finally, Accenture suggests banks offer personalized digital solutions to customers’ financial needs. None of these steps are easy, but responding to changes in how customers bank seems to be a challenge that won’t go away anytime soon.

May 29, 2014