Prepaid Debit Card Reviews, Complaints, Etc

Tag: consumer financial protection bureau

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

    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.

     

  • Consumer Advocates: Credit CARD Act Saves $12.6 Billion Annually

    Consumer Advocates: Credit CARD Act Saves $12.6 Billion Annually

    On the fifth anniversary of the passage of the federal Credit CARD Act of 2009, a group of consumer advocates praised its effectiveness in saving Americans $12.6 billion per year and urged similar legislation for debit and prepaid cards. Groups ranging from Americans for Financial Reform to Consumer Action to the National Consumer Law Center argue that the controversial legislation has helped eliminate many consumer-unfriendly fees and practices.

    “The CARD Act has been hugely successful in banning the biggest unfair credit card gotchas like retroactive interest rate hikes and excessive penalty fees,” says Linda Sherry, Director of National Priorities at Consumer Action. The Consumer Financial Protection Bureau (CFPB) has calculated that the law saves consumers $4 billion per year in fees alone, while another estimate puts the total savings from banned interest charges and fees closer to $13 billion each year.

    While Sherry says that more action is needed to bolster credit card protections, like limits on fees and other credit safeguards, she and the other advocates used the anniversary to urge legislation to address problems with debit and prepaid cards. In particular, the groups take aim at overdraft fees, which the Center for Responsible Lending costs consumers nearly $6 billion per year. “Overdraft fees should be completely banned on debit and prepaid card transactions,” says Lauren Saunders, associate director of the National Consumer Law Center. Rather than overdraft fees, Saunders says that transactions can be denied and consumers should have the option of skipping the purchase or paying with credit. “Keeping overdraft fees off of prepaid cards is especially important to keep those cards safe for people who have been shut out of bank accounts.”

    The consumer advocates urge lawmakers to pay special attention to prepaid cards, which they say have no consumer protections under federal law or regulations. The CFPB is currently considering new rules to protect debit and prepaid card users. Earlier this year Virginia Senator Mark Warner introduced legislation that would require prepaid card issuers fully disclose fees associated with these products.

     

     

     

     

     

     

     

     

     

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  • Target Data Breach Spawns Consumer Advisory

    Target Data Breach Spawns Consumer Advisory

    The now infamous Target data breach continues to have ripple effects. On January 27th, the Consumer Financial Protection Bureau (CFPB) issued a consumer advisory with tips on what to do if someone suspects they are a victim of what seems to be multiplying payment card data breaches.

    There’s no doubt that the Target data breach spawned this consumer advisory from the federal agency charged with protecting Americans from financially related fraud and abuse. In explaining why the consumer advisory was issued, Consumer Financial Protection Bureau head, Richard Courdray, noted that payment cards include information that can be misused by criminals. “Consumer financial products often involve significant amounts of consumer data,” he says. “In light of recent data breaches, we want to be sure that consumers know how to protect themselves and where to turn if they do suspect fraud.”

    According to the Consumer Financial Protection Bureau’s advisory, there are a number of steps people can take to protect their accounts in case of a payment card data breach. As a start, it helps to stay current with the news. In the wake of the Target data breach that spawned this particular consumer advisory, other potential payment card data breaches have come to light at retailers like Michaels Stores and Neiman Marcus. Knowing that you are a potential victim of a payment card data breach alerts you to the need to keep a close eye on your accounts. If there are any suspicious charges, the consumer advisory suggests reporting it immediately to your bank or card provider.

    The Consumer Financial Protection Bureau advises taking advantage of online or mobile account monitoring in order to catch any suspicious transactions quickly. “The sooner you tell your provider about any unauthorized debits or charges, the better,” says the consumer advisory. The advisory also urges consumers interested in protecting their accounts to keep an eye on transactions for months after any potential data breach. Unauthorized charges may not begin showing up for a long time. The Consumer Financial Protection Bureau also says to report any suspicious charges, even when the amount charged is very small. Sometimes criminals test an account to see if a small charge will go through before making larger purchases.

    If you do notice a charge you didn’t make, the Consumer Financial Protection Bureau suggests different responses depending on the type of card. For credit and debit cards, the advice is simple: cancel the card and, for a debit card, consider changing your PIN when you get a replacement. For prepaid debit cards, the Consumer Financial Protection Bureau says it’s best to check with the card provider about the best way to dispute charges. “Your rights vary depending on the type of card,” says the consumer advisory.

    The consumer advisory also urges anyone who notices a fraudulent transaction to immediately call the card provider’s toll-free customer service number rather than waiting to submit something in writing. Once you do actually write a letter detailing the facts of your case, be sure to keep a copy of the correspondence for your records.

    Finally, the Consumer Financial Protection Bureau says to report any problems with how your card provider responds to your concerns. “Card providers should investigate the charges and respond quickly – generally within 10 business days of receiving an error notice for debit card disputes or within two billing cycles for credit card disputes,” says the consumer advisory. “You have a right to know the results of the investigation.” Problems with a card provider’s response can be submitted at www.consumerfinance.gov/complaint.

     

     

     

     

     

     

     

  • Employers Cannot Mandate Prepaid Cards For Wages

    Employers Cannot Mandate Prepaid Cards For Wages

    Responding to complaints, the Consumer Financial Protection Bureau (CFPB) issued a reminder to employees that they cannot force workers to accept pay on prepaid debit cards.

    by Shane Tripcony

    Over the summer the practice of using prepaid debit cards to pay employee salaries garnered a lot of attention, much of it negative. News outlets, The New York Times, Time Magazine and Businessweek, report that employees of large companies such as McDonald’s and Time Warner Cable complained that they were being forced to accept wages deposited onto a prepaid debit card. They were not offered the option of a paper check or direct deposit.

    Employees, many of them earning minimum wage, argued that payment via prepaid debit card meant they were losing a chunk of their salary to a range of the standard fees associated with prepaid debit cards. In response to the outcry, New York Attorney General, Eric Schneiderman, launched an investigation into rules around the use of prepaid debit cards to pay salaries that were being broken. As part of that effort, Schneiderman requested information from 42 companies doing business in New York – including Sears, Home Depot and Walgreen’s – about their use of prepaid cards to meet payroll. “No worker should have to accept a form of payment that reduces take-home pay and leads to hundreds of dollars in fees,” Schneiderman told NBC News.

    Now Schneiderman is receiving support from the federal government. Last month the Consumer Financial Protection Bureau (CFPB) issued a bulletin reminding employers that they cannot require employees to receive wages on a prepaid debit card. “Today’s release warns employers that they cannot mandate that their employees receive wages on a payroll card,” CFPB Director Rich Cordray said in a statement. “And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections.

    In its statement, the CFPB declared that the use of prepaid debit cards to pay wages falls under its jurisdiction under the Electronic Fund Transfer Act and Regulation E. These provisions outline a number of employee protections specific to prepaid debit cards. Among them are written disclosures of all fees related to the cards, access to account history and limited liability in the case of unauthorized use of a card.

    In making its declaration concerning employers’ use of prepaid debit cards, the CFPB announced its intention to aggressively enforce the rules. “The Bureau intends to use its enforcement authority to stop violations before they grow into systemic problems, maximize remediation to consumers, and deter future violations,” reads a statement from the CFPB.

     

  • Reports Show Bank Customers Need More Protection From Debit Card Overdraft Fees

    Reports Show Bank Customers Need More Protection From Debit Card Overdraft Fees

    A report released this week by the Consumer Financial Protection Bureau shows bank customers need more protection from debit card overdraft fees.  The report focuses on overdraft fees banks charge customers when they overdraw their checking account with a debit or ATM card.

    Before mid-2010, when customers didn’t have enough money on their checking account to cover transactions, most banks would allow the purchase to go through and charge an overdraft fee.  This would result in multiple overdraft fees for the customer.  In 2009, the Federal Reserve adopted a new rule that prohibited banks from charging overdraft fees unless customers opted into an overdraft program in advance.

    The CFPB study found that not only did a large number of customers sign up for overdraft protection, but they continued to rack up fees.  The study also found customers who had been charged overdraft fees before the opt-in rule were more likely to opt in than those who had not been hit with overdrafts.  It also showed the more overdraft charges they had incurred before the rule, the more likely they were to opt in.  Customers who incurred at least one overdraft or bounced check fee in 2011 paid an average of $225 in overdraft fees that year.

    Banks say overdraft protection is a service some customers want and are willing to pay for.  Consumer groups say banks are luring customers into the program with confusing disclosures and marketing pitches.  “So-called ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees,” Consumers Union says in a press release.

    “We need to determine whether banks and credit unions are causing the kind of consumer harm that the federal consumer protections laws are designed to prevent,” said CFPB Director Richard Cordray.

    Consumers Union says the report “underscores the need for new reforms to protect customers from unfair checking account overdraft programs.”  It urges the bureau and other federal regulators to simplify disclosures of overdraft policies, require that overdraft fees be reasonable and proportional to the financial institution’s cost, limit the number of overdraft fees that can be charged per day and year and prohibit banks from processing daily transactions in a way that maximizes fees.  A bill sponsored by Rep. Carolyn Maloney, D-N.Y, would do many of those things including limiting fees o one per month and six per year.

    For more information on the CFPB Study of Overdraft Programs, visit:  http://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf

    For more information on this article, visit:  http://blog.sfgate.com/pender/2013/06/11/bank-customers-still-racking-up-debit-card-overdraft-fees-report-says/

Prepaid Debit Card Reviews, Complaints, Etc