Prepaid Debit Card Reviews, Complaints, Etc

Tag: prepaid card

  • 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

     

     

  • 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.

Prepaid Debit Card Reviews, Complaints, Etc