Prepaid Debit Card Reviews, Complaints, Etc

Tag: debit prepaid card

  • Green Dot Posts Solid Results Despite Increased Competition

    Green Dot Posts Solid Results Despite Increased Competition

    By Shane Tripcony

    One of the most prominent messages on the homepage of Green Dot Corporation, a longtime issuer of prepaid debit cards, is a simple one. “Big Banks, No Thanks,” blares a nearly screen-sized headline, which alternates between a promotional message about something consumers likely care a good bit more about: a chance to win a year of free gas.

    In many ways, this short, punchy salvo – which is buttressed with the message, “The Green Dot Card is the smart and easy way to manage your money,” along with a 5- question quiz that purports to answer whether a Green Dot Card is right for you – says an enormous amount about the state of the prepaid debit card industry today. It’s hardly a new flash to readers of this site, but large financial institutions of all sorts, including American Express and JP Morgan Chase, have begun offering prepaid debit cards in hopes of grabbing a slice of this quickly expanding and lucrative market.

    For prepaid debit card consumers, the attention of big financial players has been an undeniably good thing: fierce competition among rivals, some of whom are willing to forgo chunks of revenue in the short-term in order to gain market share, have put much needed downward pressure on fees and increased overall transparency. But longstanding industry players like Green Dot could be forgiven for not being thrilled with the prospect of tough competition that threatens to eat away at their profits.

    Still, Green Dot’s web page swipe at its competitors isn’t exactly an effort to mask the company’s weakness. In fact, on July 30 of 2013 the company announced results for the second quarter and Green Dot seems to be holding its own just fine, thank you. Indeed, the California-based company reported net income of $11.3 million for the quarter, which was 4 percent higher than the same period in 2012. Additionally, revenue topped $142million, which was also 4 percent higher than the previous year. At the same time, Green Dot provided an improved full-year guidance, announcing that it expects operating revenue to come in somewhere between $565 million and $575 million and earnings per share to be in the $1.05 to $1.20 range. The better than expected results prompted Green Dot’s shares to jump 16 percent the day after its announcement.

    “Despite aggressive competition from large financial services companies and rigid self-imposed risk controls that materially reduced new customer enrollment, we believe Green Dot remains the clear leader in the prepaid space and is well positioned for the future,” said the company’s CEO Steve Streit. And far from going on the defensive, Green Dot also unveiled a distribution partnership with the likes of Home Depot and Dollar General, which will up its nationwide presence by about 20,000 retail locations.

    None of this is to say that Green Dot doesn’t face challenges, as Motley Fool contributor Jordan Wathen goes at lengths to explaining a recent post, citing in particular the threat posed by American Express Company’s Bluebird card. But whatever the threats may be, it seems clear that Green Dot won’t be going away quietly.

  • On The Hook? – The Advantages and Loopholes of Zero Liability.

    On The Hook? – The Advantages and Loopholes of Zero Liability.

    When you carry a credit, debit or prepaid debit card with a Visa or MasterCard logo, you’re entitled to zero liability protection should a thief make unauthorized purchases with your card. “Zero liability protection is essentially a choice made by plastic issuers to add an additional layer of fraud protection above what is required by federal law,” says John Ulzheime, president of Consumer Education at SmartCredit.com.

    “With zero liability protection, the issuer chooses to absorb any fraudulent charges made on a card.”
    Zero liability protection is a voluntary consumer protection from the ubiquitous card networks Visa and MasterCard and is provided to consumers through financial institutions issuing credit, debit or prepaid debit cards utilizing their logos. But there are some key loopholes and exceptions to zero liability protection to keep in mind,especially for debit and prepaid debit card users, according to the research and advocacy group Consumers Union. “If you put in a PIN to make a purchase at the register or put in a PIN at an ATM, you will not be covered,” says Michelle Jun, a senior attorney at Consumers Union. “That’s particularly important for debit and prepaid cards. You wouldn’t be affected as much with a credit card.”

    Here’s a look at how zero liability works (and doesn’t) with credit, debit and prepaid debit cards.
    Credit cards.

    Quite simply, credit cards offer the most protection. Thanks to the
    Fair Credit Billing Act, your liability is limited to just $50 if a credit card is lost or stolen. “Credit cards provide the most guaranteed protections under the law,” Jun says.

    And if you contact your card issuer as soon as you realize a credit card has been lost or stolen or your card account compromised, you won’t pay a penny of any unauthorized charges a thief rings up, thanks to zero liability protection offered by most card issuers. “Zero liability
    protection is not a requirement but given the competitive nature of financial services, not offering zero liability protection really puts you in a less attractive position,” Ulzheimer says.

    Debit cards

    The Electronic Fund Transfer Act offers federal consumer protections for unauthorized debit
    card transactions. But you’ll need to act fast to be as fully covered as possible. “With debit cards, you can limit liability to $50 or $500 depending on how quickly you make the report,”
    Jun says.

    If you report a debit card missing within two business days, your liability is limited to $50. But if
    you wait up to 60 days after your card statement was sent to you, you can lose up to $500. If you wait longer than 60 days, you can lose all the money that was taken from your account, according Beverly Harzog, credit card expert and author of the forthcoming book “Confessions of a Credit Junkie.”

    In certain instances, though, zero liability protection can help get the money back in your card account if a thief swipes a debit card. But remember, PIN-based purchases and PIN-based transactions at ATMs may not be covered. So if a thief gets hold of your PIN and goes shopping, you’ll need to act quickly to limit your liability. “Once it falls into the wrong hands, the money is gone,” Jun says. “It’s up to you to make a claim and defend your money.”

    Prepaid debit cards

    There are no federal consumer protections for lost or stolen prepaid debit cards. Not only that, but a
    report by Consumers Union found the voluntary zero liability protections offered for prepaid debit cards “insufficient” and stated there were “significant loopholes” with the coverage.

    For instance, Visa’s zero liability policy does not cover ATM transactions or PIN transactions that are not processed on the Visa network. And card transactions may take place on other networks even if the card has a Visa logo, according to Consumers Union. MasterCard’s zero liability policy
    also has loopholes, particularly for those who have been victimized by thieves in the past. Indeed, the MasterCard policy does not give any protection if a consumer reported two or more unauthorized events in the past 12 months, does not cover ATM or PIN transactions, and may require the card to be registered, according to the Consumers Union report.

    “It’s important to note there are zero liability protections but they aren’t bullet-proof,” Jun says. So what to do? First off, contact your issuer as soon as possible if a thief swipes your prepaid debit card. And check for voluntary consumer protections in your cardholder agreement. “Of course nobody wants to go back and read the contract but if it means you’re going to get your money back it may be something worth doing,” Jun says.

    Just be aware that with prepaid debit cards, consumer protections for unauthorized use are voluntary and can be changed or rescinded by the issuer at any time. “Hopefully you’re dealing with a company that’s very reputable and will stand by their word,” Jun says. But if you do have trouble with your card issuer following the theft of a prepaid debit card, you can report the incident to the Consumer Financial Protection Bureau.

    While there’s no guarantee that a complaint will get money back into your account, the bureau vows to contact the card issuer on your behalf and request a response, which it will then share with you. If nothing else, the Consumer Financial Protection Bureau says that complaints helps it to write better rules and regulations so that it can better address recurring problems in the future.

  • A Better Payroll Card – Prepaid Debit Cards Without Victimizing Employees

    A Better Payroll Card – Prepaid Debit Cards Without Victimizing Employees

    Big companies like McDonald’s, Taco Bell and Walgreens received a heavy dose of negative press recently – not to mention unwanted attention from New York’s attorney general – when a host of stories appeared highlighting the practice of paying some workers with prepaid debit cards. The stories detailed how large corporations can save a lot of money by replacing direct deposit or paper checks traditionally used to pay wages with prepaid debit cards.

    But plenty of workers, many of them earning minimum wage, have complained about the practice, arguing that the fees associated with many prepaid cards take too large of a chunk from their earnings. But the use of prepaid debit cards to pay workers who don’t have traditional bank accounts isn’t necessarily a bad thing.

    At least that’s the conclusion reached in an opinion piece published by the American Payroll Association (APA) and the National Consumer Law Center (NCLC), two advocacy groups with very different constituencies. The National Consumer Law Center has been focused on promoting economic security for low-income and other disadvantaged people while the American Payroll Association provides education and training to thousands of payroll professionals. “Though we represent different constituencies (low income consumers and payroll administrators), we agree that payroll cards can offer unbanked workers an economical, safe and convenient way to receive their wages,” write the authors, William Dunn of the APA and Lauren Sanders of the NCLC.

    But the two organizations attach a host of caveats to their endorsement of the use of prepaid cards. Among the guidelines the groups suggest for the use of prepaid cards are
    these:

    • At least once during each pay period employees should be able to access all of their wages without having to pay any fees. That means that workers should be able to go to an ATM, a bank teller or get cash back from a purchase without being hit with a charge.

    • Workers should have a choice – be it direct deposit or paper check or prepaid card – about how to receive their pay. They should also be able to change the method of payment when they’d like.

    • Employees should be offered a prepaid card that is widely accepted, such as one bearing the Visa, MasterCard or Discover logo. If possible, the cards used should have a large network of surcharge-free ATMs.

    • Employers need to provide training about how prepaid debit cards work and what terms are required to understand them so that they can access their money without paying any fees.

  • Consumer Reports Rates Prepaid Cards

    Consumer Reports Rates Prepaid Cards

    When Consumer Reports talk, people listen. Whether it’s cars, refrigerators, electronics or even health care, the evaluations that Consumer Reports and its team of researchers and testers come up with are often the first place shoppers go when they’re trying to make a smart choice among lots of options.

    With the release of its report, “Prepaid Cards: How they Rate on Value, Convenience, Safety and Fee Accessibility and Clarity” in July of 2013, the venerable magazine has now weighed in on the quality (or lack thereof) of many individual cards available on the market. Not surprisingly, of the 26 total cards that were examined, the ones that fared best in the rankings scored well in all four categories. “All the best prepaid cards have few types of fees, and offer consumers opportunities to avoid fees. Each is safe to use, carrying FDIC (Federal Deposit Insurance Corporation) insurance to the individual cardholder,” write the report’s authors. “All are convenient, with functionality that in many ways is on par with a checking account. Consumers looking to acquire these cards will find fee information accessible and easy to understand.”

    Although none of the cards evaluated by Consumer Reports did well enough to garner an “excellent” rating, three of the cards were deemed “very good,” which was sufficient for them to be “recommended.” The three cards earning the Consumer Reports stamp of approval are:

    • The Bluebird with direct deposit from American Express

    • The H&R Block Emerald Prepaid MasterCard

    • The Green Dot Card

    And then there were all of the poorly rated cards. “All of the worst cards have high, unavoidable fees, including activation and monthly fees,” write the report’s authors. “Moreover, consumers are likely to have difficulty finding and understanding what those fees are.” To understand just how wide a variation there was in the overall score of the cards, consider that the top-ranked Bluebird earned 80 points across all four categories. By contrast, the lowest scorer – the American Express for Target card – tallied just 17 points. The three cards that earned the worst marks are:

    • American Express for Target

    • Redpack Mi Promesa Prepaid MasterCard

    • Reach Visa Prepaid Card

    Although Consumer Reports’ policy and advocacy division, Consumers Union, has followed prepaid cards for a number of years now, the organization decided to revisit the topic in more depth recently because of important changes in the marketplace. Perhaps most importantly, Consumer Reports notes that prepaid cards are simply getting more prevalent and popular, citing the fact that prepaid cards were used in 1.3 billion transactions totaling $77 billion in 2012 and by 2014 it is expected that $167 billion will be deposited into prepaid accounts. In addition, the report notes that large financial institutions, such as JP Morgan Chase and U.S. Bank, are now offering lower fee and more transparent cards. “In light of these developments, we decided to evaluate and rate prepaid cards,” says the report.

  • 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

     

     

Prepaid Debit Card Reviews, Complaints, Etc