Prepaid Debit Card Reviews, Complaints, Etc

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  • Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    Study Shows Prepaid Growth – Prepaid Cards Multiplying Rapidly

    The eighth installment of the Debit Issuer Study was released in July and the results
    reaffirmed what many observers can plainly see: prepaid cards are multiplying at a rapid
    rate. Commissioned by the ATM/debit network PULSE, a Discover Financial Services
    Company, and conducted by the consulting group Oliver Wyman, the annual study took
    the pulse of 64 large banks, credit unions and community banks to better understand both
    their current activities and plans for the massive debit market.

    In general, what the study found was that most financial institutions have already
    embraced prepaid cards in one form or another. Indeed, fully 84% of the study’s
    participants – which collectively represent almost half of all debit transactions in the U.S.
    – offer a prepaid card. Typically, the most popular cards offered are gift cards, which are
    sold by 73% of issuers. But the study’s authors also note that financial institution’s
    attitudes towards gift cards – which have weak sales – are indifferent at best.

    By stark contrast, re-loadable prepaid debit cards are soaring in popularity. In fact,
    between 2011 and 2012 the number of financial institutions offering them nearly
    doubled, going from 19% to 36%. That rapid growth can be easily explained by study
    participant’s expectations for 2013 prepaid card sales. Although respondents project that
    gift card sales will slump by 2% in 2013, they anticipate 55% year-over-year growth for
    re-loadable prepaid cards.

    Naturally, the PULSE study also closely examined the state of debit cards. Although
    changes to the law have put a ceiling on fees – known as interchange rates – that can be
    charged when consumers use a debit card for either a PIN purchase or one that requires a
    signature, the debit market continues to grow. “Even in the face of significant regulatory
    challenges, issuers managed to grow their debit volumes in 2012 and expect further
    growth this year,” says Steve Sievert, executive vice president of marketing and
    communications for PULSE.

    Overall, survey respondents saw a 14% increase in PIN transactions and a 6% hike in
    signature purchases in 2012. Looking to 2013, financial institutions expect 8% and 4%
    increases, respectively. “Issuers are more tepid in their outlook for debit. They still expect
    the industry to grow, just not as rapidly as in the past,” says Tony Hayes, a partner at
    Oliver Wyman, who co-led the study. “In fact, this is the lowest growth project for
    signature debit we’ve seen since the study began.”

  • Separate and Unequal – Varying Consumer Protections

    Separate and Unequal – Varying Consumer Protections

    They may look similar but when it comes to consumer protections, credit cards, debit cards and prepaid debit cards are worlds apart. If a credit card or debit card is lost or stolen, you have federal law on your side. Credit cards are protected under the Fair Credit Billing Act and debit cards get coverage from the Electronic Fund Transfer Act.

    In sharp contrast, there are no federal consumer protections for prepaid debit cards. “The first thing is what happens if a card is lost or stolen? ” asks Michelle Jun, senior attorney at Consumers Union. “There’s no federal law that covers prepaid debit cards. It’s really up to the program manager.” Which is another way of saying that it’s up to the company issuing the card what, if any, protections to provide its customers. Indeed, with prepaid debit cards, consumer protections for unauthorized use are voluntary and can be changed or rescinded by the issuer at any time, according to a Consumers Union report.

    “It’s subject to whatever the company wants to give you,” Jun says. “It’s determined by whatever the contract says or whatever the customer service rep says and that’s pretty important if people are relying on that money to buy groceries.” Here’s a look at the contrasting consumer protections for credit cards, debit cards and prepaid debit cards.

    Credit cards
    Credit cards are the gold standard when it comes to consumer safeguards. Thanks to federal law, your liability is limited to just $50 if a credit card is lost or stolen. “When it comes to plastic, credit cards have the best consumer protections,” says Beverly Harzog, credit card expert and author of the forthcoming book, “Confessions of a Credit Junkie.”

    “Consumers who report their card missing before a thief can use it aren’t liable for any
    charges on their stolen or lost card. But even if you don’t report before a thief uses your
    card, your loss for any unauthorized charges on your credit card is limited to $50. Many
    of the major issuers even offer zero liability protection.”

    Debit card

    There’s no blanket answer to what your individual responsibility may be for charges made on a lost or stolen debit card. Under federal law, your liability depends on how quickly you report the theft to your bank.

    With a debit card, you aren’t liable for any charges if you report it missing before a fraudster can use it,” Harzog says. “Now, if you report it missing within two business days, you’re only liable for up to $50. If you report the loss after two business days have passed, but before 60 calendar days have passed since your statement was sent to you, you can lose up to $500.

    If you allow more than 60 calendar days to go by, you can lose all the money that was taken from your account and from any accounts that were linked to your debit card.” Naturally, being vigilant and acting fast matters when it comes to debit cards. To lower your risk of debit card theft, monitor your account carefully. “You can increase your protection against debit card fraud by checking your statements and your online account frequently,” Harzog says.

    Prepaid debit card

    And then there are prepaid debit cards. Perhaps because these products have only relatively recently gained mainstream popularity, consumer protections for a lost or stolen card are voluntary and vary by card issuer. You have way fewer protections on prepaid debit cards compared to a credit card on limits of liability. It all depends on what kind of prepaid card you have and from which vendor, says Mary Ann Campbell, a certified financial planner who teaches personal and family finance at the University of Central Arkansas and runs the web site www.moneymagic.com. Be sure and read the fine print in your contract and check the web site of your provider

    .Registering a prepaid card with an issuer may be required to receive a reimbursement if a card is lost or stolen, according to a study of prepaid cards by Consumer Action. Campbell recommends acting quickly if a thief should snatch a prepaid debit card. It’s wise to carry your provider’s contact information in your phone or have it at home so you can contact them immediately, Campbell says.

    Campbell recommends acting quickly if a thief should snatch a prepaid debit card. It’s wise to carry your provider’s contact information in your phone or have it at home soyou can contact them immediately, Campbell says If you carry your card and contact numbers in your smartphone, be sure and set a password on your phone to protect your information.”

    Helpful links:

    http://www.consumer.ftc.gov/articles/0219-fair-credit-billing

    https://www.bestprepaiddebitcards.com/debit-cards/death-taxes-and-lost-or-stolen-debit-cards

    http://www.consumer.ftc.gov/articles/0219-fair-credit-billing

    http://www.consumer-action.org/downloads/english/prepaid_booklet_straight_line.pdf

     

     

  • The Occupy Prepaid Card: The Occupy Money Cooperative is being launched

    The Occupy Prepaid Card: The Occupy Money Cooperative is being launched

    Nearly two years after the Occupy Wall Street movement grabbed the attention of the media, politicians and general public, the rag-tag collection of protesters is back in the news. This time, however, the loose coalition – whose ire was targeted at the financial and political institutions that cement advantages for a few while ignoring the plight of the many – is announcing its entry into the very banking industry it so loathes.

    Indeed, according to a July 23 article in Forbes, the Occupy Money Cooperative is being launched, and its very first product will be a prepaid debit card. Not surprisingly, the ethos behind the Occupy Money Cooperative and its new prepaid debit card is both decidedly democratic, and a new way to highlight what its founders see as the predatory practices of the banking industry. “We launched [the Occupy Money Cooperative] because we felt the way the for-profit banking industry operates in the U.S., it intrinsically exposes the U.S. economy to risk and makes us vulnerable to the consequences but, above all, fails many millions of Americans who don’t have bank accounts and are denied banking services,” founder and director Carne Ross told Forbes contributor Laura Shin.

    The article goes on to point out that the Occupy Money Cooperative will be run in a similar fashion as a credit union, which are owned and controlled by members, albeit the Occupy version will have membership open to anybody who applies. The new entity’s web site explains that it hopes to, among other things, impact the entire financial community by providing an example of how a financial services organization can function in a way that benefits society as a whole. It also commits itself to being low cost, transparent and available to anyone. The first test of that philosophy will come with the release of a prepaid debit card, which the article says will happen once it has raised sufficient money for staff and operating expenses. The so-called Occupy Card will be extremely low cost, charging users just $0.99 per month. But other important details about typical prepaid debit card fees, including for ATM withdrawals and other transactions, were not yet available. “Like any prepaid card, there will be a range of fees. We hope the Occupy Card will be among the best value on the market, and one thing we guarantee are that all costs and fees will be completely transparent and clear to the consumer,” Ross told Forbes.

    Given the legacy prepaid cards have had of victimizing low-income consumers who have no other banking options available, this product alone could stand as one of the Occupy movements most tangible accomplishments.

  • The Good, The Bad And The Ugly – Card Purchase Disputes

    The Good, The Bad And The Ugly – Card Purchase Disputes

    Looks can be very deceiving. At least that’s the case should you decide to dispute a purchase you made using a prepaid, debit or credit card. While they can all look like the same hunk of plastic –and function with a quick swipe – there’s a very big difference in the legal and consumer rights that back you up if you are unhappy with the quality of the goods that you purchased and enter into a dispute with a merchant.

    In a nutshell, credit cards offer a lot of protection, debit cards a little and prepaid cards none at all. Indeed, with credit card purchases, you have the full force of the Fair Credit Billing Act on your side. Under the Electronic Fund Transfer Act, which covers debit card transactions, you have limited merchant dispute rights, except for unauthorized transactions. And there are no federal consumer protections for purchases made with prepaid debit cards.
    Let’s take a closer look at each.

    Credit cards
    If you have a beef with the quality of something you bought at a store, it’s best if you made the purchase with a credit card. In fact, when disputing a purchase with a credit card, you can request the card issuer charge back the amount of the purchase to the merchant until the dispute is resolved.

    “On a credit card, you have a big advantage and the best protection due to the Fair Credit Billing Act,” says Mary Ann Campbell, a certified financial planner who teaches personal and family finance at the University of Central Arkansas and runs the web site www.moneymagic.com.“You can file a dispute claim and the charge can be charged back to the merchant until the dispute is decided.”

    Debit cards
    Things aren’t so straightforward when it comes to debit cards. When disputing a purchase with a debit card, your rights under federal law are limited, except for unauthorized purchases made with the card. “Consumers don’t have the same protections in the case of debit cards, which are covered by Regulation E, the Electronic Funds Transfer Act,” says Gerri Detweiler, a credit expert, author and host of Talk Credit Radio. “That law gives the consumer the right to dispute a charge in the case of unauthorized use but that’s it.”

    In other words, your best bet when it comes to disputing a charge with a debit card is if you’re the unfortunate victim of a crime or simply lost your card. Otherwise, if you’re unhappy with the quality of an item purchased with a debit card, it’s up to you to try to get the money refunded to your bank account. “If you pay for an item with a debit card and you’re unhappy with the product, you have to get your money back,” says Beverly Harzog, credit card expert and author of the forthcoming book, “Confessions of a Credit Junkie.” “You’ll need to contact the merchant and see if you can return the product or make an exchange. If you can’t work it out, then contact your financial institution for assistance. You will need to fill out paperwork and it may all work out in the end and you could get your money back. But in the meantime, you don’t have access to the amount of money that’s in the dispute.”

    Prepaid debit cards 
    And then there are prepaid debit cards, which offer no federal protections for disputed charges.“With prepaid cards, you will be stuck with the item or out the money,” says Michelle Jun, senior attorney at Consumers Union. You may reach out to your prepaid debit card issuer for assistance with a merchant dispute. Just be aware that any assistance they offer is voluntary. Also, some prepaid debit card issuers may charge fees for customer service calls.

    No matter the type of card you used to buy something, the first step in resolving a dispute with a merchant is contacting the merchant directly. “Regardless of the type of card you’re using, contact the merchant first and try to resolve your issue,” Campbell says. “Put as much in writing as possible to leave a paper trail of documents that might help you plead your case in the future.”

    The Federal Trade Commission offers consumer tips for resolving complaints with merchants and even includes a sample complaint letter.

    According to the FTC, you will want to:
    • Contact the merchant as soon as possible because some retailers have time limits on returns and refunds.
    • Keep a record of your conversations with the retailer including who you spoke with and when, and what action they promised.
    • Ask for a manager if a store employee or customer service rep doesn’t have the authority to help you.

  • The Crime Of Our Century – Prepaid Card Identity Theft

    The Crime Of Our Century – Prepaid Card Identity Theft

    The current boom in identity theft was predictable, maybe even inevitable. It’s a natural result of what we might call “identity inflation.”

    Not so long ago, the information on file about the average American consisted of a fairly small number of paper records, stored in metal cabinets in far-flung offices. People’s financial particulars were usually revealed only to a discreet local banker. Criminal impersonation took time and effort, not to mention lock-picking skills.

    Today, thanks to electronic communication, we routinely share our most sensitive data – whether we know it or not – with people around the world. This information is continuously being collected, organized and stored in cyberspace. All a would-be impostor has to do is locate it.

    By no means are prepaid debit cards immune to this growing threat. In fact, prepaid cards have been involved in some of the most brazen recent cases of identity theft. In May 2013, for instance, the U.S. government alleged that an international ring of crooks had used prepaid cards to loot $45 million from banks in the Middle East. The scheme, as described by the feds, was a blend of high-tech and grass-roots larceny. Hackers “tricked” cards into drastically raising their cash limits. Then a worldwide army of accomplices fanned out to withdraw the money from ATMs before security experts spotted trouble. Most prepaid debit card fraud is not so elaborate. But no one denies that the nature of these cards makes them especially appealing to lawbreakers.

    Crooks are clever
    The well-known 2012 study by the Pew Charitable Trusts noted that “perceived anonymity” is one of the things people like most about prepaid debit cards. And it’s more than just perceived. These cards, once they’re loaded with money, are self-contained spending instruments. Because they are not linked to checking accounts or credit accounts, they don’t help reveal customers’ financial histories or allow for easy tracking.

    An honest consumer’s desire for such anonymity is understandable. But thieves crave anonymity, too, and for all the wrong reasons.

    Taking advantage of the “here-and-gone” potential of prepaid cards, crooks often use them to move ill-gotten funds. More sophisticated scammers, as in the alleged Middle East case, can forge data to temporarily “create” electronic assets, then hurriedly convert them into cash or goods. Once the ruse is recognized, a merchant or financial institution is left holding the bag. Because prepaid card transactions rarely involve big sums, this kind of scheme requires lots of manpower, but recruitment is apparently easy.

    Heists hurt the economy. But should fraud be a concern for you, the law-abiding individual with a prepaid card? Are you personally at risk? The answer, unfortunately, is yes.
    Nationally recognized credit expert John Ulzheimer, no fan of prepaid debit cards, says bluntly, “They facilitate fraud,” he says. “If anyone were to steal or find your card, or otherwise compromise the account information, they could easily use the card or steal its value.” That danger is the flip side of anonymity: A card that acts like cash can be used by anyone. Some cards have fraud protection, but as Ulzheimer points out, many do not.

    What would James Bond do?
    The good news, if there is such a thing, about this fraud vulnerability is that it’s limited. The amount of money on a prepaid debit card is rarely large, and once that money is spent, there’s no more damage the thief can do to you. Ulzheimer acknowledges that “the exposure is relatively low, unless you’re irresponsible and leave the card lying around.”
    Carelessness is obviously foolish. But these days, even ordinary caution may be insufficient. Instead, assume that someone is always spying on you, and treat your prepaid debit card as classified information. Get the safest card you can, especially in terms of fraud protection. Don’t share it or lose sight of it. Don’t even talk casually about having it, any more than you would chat about carrying cash. Use the card only in situations where you feel secure, and beware of bystanders monitoring your actions.
    Don’t feel embarrassed about being vigilant. Scammers who can scoop up millions of dollars in a few hours can bilk you if you give them the least opportunity. If all this talk of identity theft and stolen data makes you feel besieged by mysterious forces beyond your control, Ulzheimer has a realistic reminder about prepaid debit cards. Maybe it’s reassuring. Or maybe not.

    “Most fraud is perpetrated by family and friends,” he says.

  • The Battle Over Swipe Fees

    The Battle Over Swipe Fees

    When the so-called Dodd-Frank law passed in 2010, one of its measures was pretty easy to quantify. A sprawling, complicated and controversial piece of legislation aimed at taming the most egregious of abuses perpetrated by the financial services industry in the years before the 2008 financial collapse, Dodd-Frank also addressed the amount of money debit card issuers could charge retailers when a customer made a purchase with plastic. The Federal Reserve was tasked with deciding what the cap should be and eventually settled on a number just below 25 cents per transaction. Estimates on the impact of the ceiling on that fee– known as a swipe fee because it’s a charge that gets racked up when a retailer swipes a card – on banks and card processors come to around $8 billion annually, a hefty chunk of change.

    According to a recent report from Bloomberg News, banks and payment networks are working hard in state capitals around the country in an effort to prevent restaurant and clothing storeowners from charging their clients more to pay their tabs with credit cards than they do for debit card and cash transactions. According to the Bloomberg story, written by reporter Carter Dougherty, banks and their allies have already been successful in banning surcharges on credit card purchases in Utah, and around 20 other states are also considering bills related to swipe fees.

    In a nutshell, what the legislative initiatives in Utah and other states is aimed at doing is preventing retailers from urging – particularly through the use of surcharges – their customers from opting for cash or debit cards over credit. At issue, of course, is money. Banks and card processors are eager to keep as many customers as possible in the habit of using their credit cards when they buy a meal or an iPod; according to the Bloomberg report, card issuers earn between 1 and 3 percent of a transaction whenever someone uses their Visa, MasterCard or American Express card.

    Not surprisingly, retailers want to see swipe fees associated with credit cards as low as possible, contending that they are already too much of an unfair cash cow for banks. “I view the banks and credit-card companies as unwanted business partners. They do not work anywhere near as hard as I do, yet they collect nearly as much in fees as the average restaurant earns in profit,” wrote Ted Burke, the co-owner of the Shadowbrook Restaurant in Capitola, California, in the San Francisco Chronicle. “Business owners like me can negotiate virtually all of our costs, but we are powerless to negotiate swipe fees.” If banks and card processors are successful on the state level, many retailers also won’t be able to encourage customers to opt for lower fee debit cards. Under federal law, business a credit card transaction can cost a consumer more than a debit or cash purchase.

Prepaid Debit Card Reviews, Complaints, Etc