Credit and Debit Card Ratings

Senate Bill Aims To Ensure Prepaid Card Fee Disclosure

U.S. Senator Mark Warner chose the end of the holiday shopping season to introduce a bill that would mandate prepaid card fee disclosure. Warner, a Democrat from Virginia, unveiled the Prepaid Card Disclosure Act of 2014 on January 9, and cited the recently completed holiday gift buying season and the industry’s rapid growth as the reasons motivating his bill.

“At nearly $700 billion in sales each year, prepaid cards are one of the fastest growing parts of the financial industry,” he says. “However, these cards aren’t subject to the same kinds of consumer protections as other types of credit cards and gift cards. It’s important that young people and people without credit history or access to traditional banking tools have access to prepaid cards, but we can’t let the technology outpace smart consumer protections.”

Specifically, Warner’s bill would task the Consumer Financial Protection Bureau (CFPB) with formulating and issuing rules that would require banks and other providers of prepaid cards to disclose their fees in a standardized manner. Among other things, the Prepaid Card Disclosure Act would require card issuers to reveal all of the fees associated with their products in an easily understood and conspicuous table that would be available to consumers before any purchase. In addition, the bill would insist banks allow consumers to use their smartphones to obtain real-time fee updates via a QR code or barcode. The proposed legislation would also require card issuers include both a toll-free telephone number and a website on each physical card where consumers could get detailed information about fees.

In announcing the legislation Warner cited a range of fees that, while commonly associated with prepaid cards, may not be well known among the general public. Among the fees Warner, a member of the Senate Banking Committee, mentioned were fees to activate an account, monthly maintenance fees, and for checking account balances. Consumer advocates warmly received the bill. “Pew commends Senator Warner for taking action to require clear disclosures for prepaid cards. Pew’s research shows that inconsistent disclosures make it very difficult for consumers to understand the terms and fees associated with each card,” says Susan Weinstock, director of safe checking research at The Pew Charitable Trusts. “The growing number of consumers turning to prepaid cards as a way to manage their money underscores the need for reform.”

 

 

Author: Chris Warren

  • Senate Bill Aims To Ensure Prepaid Card Fee Disclosure

    Senate Bill Aims To Ensure Prepaid Card Fee Disclosure

    U.S. Senator Mark Warner chose the end of the holiday shopping season to introduce a bill that would mandate prepaid card fee disclosure. Warner, a Democrat from Virginia, unveiled the Prepaid Card Disclosure Act of 2014 on January 9, and cited the recently completed holiday gift buying season and the industry’s rapid growth as the reasons motivating his bill.

    “At nearly $700 billion in sales each year, prepaid cards are one of the fastest growing parts of the financial industry,” he says. “However, these cards aren’t subject to the same kinds of consumer protections as other types of credit cards and gift cards. It’s important that young people and people without credit history or access to traditional banking tools have access to prepaid cards, but we can’t let the technology outpace smart consumer protections.”

    Specifically, Warner’s bill would task the Consumer Financial Protection Bureau (CFPB) with formulating and issuing rules that would require banks and other providers of prepaid cards to disclose their fees in a standardized manner. Among other things, the Prepaid Card Disclosure Act would require card issuers to reveal all of the fees associated with their products in an easily understood and conspicuous table that would be available to consumers before any purchase. In addition, the bill would insist banks allow consumers to use their smartphones to obtain real-time fee updates via a QR code or barcode. The proposed legislation would also require card issuers include both a toll-free telephone number and a website on each physical card where consumers could get detailed information about fees.

    In announcing the legislation Warner cited a range of fees that, while commonly associated with prepaid cards, may not be well known among the general public. Among the fees Warner, a member of the Senate Banking Committee, mentioned were fees to activate an account, monthly maintenance fees, and for checking account balances. Consumer advocates warmly received the bill. “Pew commends Senator Warner for taking action to require clear disclosures for prepaid cards. Pew’s research shows that inconsistent disclosures make it very difficult for consumers to understand the terms and fees associated with each card,” says Susan Weinstock, director of safe checking research at The Pew Charitable Trusts. “The growing number of consumers turning to prepaid cards as a way to manage their money underscores the need for reform.”

     

     

  • Pot Purchases with Plastic? The Credit and Debit Cards Question

    Pot Purchases with Plastic? The Credit and Debit Cards Question

    One of the first major news stories of 2014 is all about marijuana. Starting January 1, pot has been available for commercial purchase by non-medical customers in Colorado. In other words, Colorado residents are now able to purchase marijuana for recreational use by walking into a store, making a selection and paying for it at the counter – just as if they were purchasing a gallon of milk or an iPad.

    But one question that has accompanied the rollout of legal pot sales in the Rocky Mountain State is whether customers would only be able to make purchases with cash. It’s an issue because marijuana sales, while legal in both Colorado and Washington State, are still prohibited by the federal government. So, out of this arises this: pot purchases with plastic? It opens up the credit and debit cards question on pot purchases.

    In the past both Visa and MasterCard said that they would not allow illegal transactions to flow through their payment systems. But a recent article in the Denver Post indicates that credit and debit cards are being used to buy marijuana in Colorado. In part, this is due to the fact that Visa and MasterCard are leaving the decision about whether credit and debit cards bearing their logos can be used up to individual merchant banks.

    “In this instance, the federal government considers the sale of marijuana legal but has announced that it will not challenge state laws that legalize and regulate marijuana sales,” Visa said, in a statement to Denver Post reporter, David Migoya. “Given the federal government’s position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers (banks) are best suited to make any determination about potential illegality.”

    While experts quoted in the Denver Post story maintain that Colorado pot retailers still face a risk in choosing to offer credit and debit card payment options, the motivation to do so is clear. In his story, Migoya quotes a customer who decided to make a bigger purchase when he found out that the store accepted plastic. “I showed up with some cash on hand because I had read prior that these places would be cash only,” said the customer, who would give only his first name, Kevin. “Once I found out that they were taking cards, I decided to buy more than the $25 in cash I had with me.”

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