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Friday, January 3, 2014

Menendez sponsors another prepaid card protection bill

On Dec. 20, 2013, Sen. Robert Menendez, D-N.J., re-introduced a prepaid card consumer protection bill that is not materially different from bills he sponsored in 2010 and 2011. The Prepaid Card Consumer Protection Act of 2013, S. 1867, is designed to rein in so-called hidden fees and strengthen financial protections on prepaid cards.

The legislation would restrict the fees prepaid card providers can charge cardholders and mandate that providers clearly disclose fee schedules before customers buy cards. The bill would also direct that providers offer consumer protections when prepaid cards are lost, stolen, or when providers go bankrupt.

S. 1867 would:

  • Put limits on the types of fees that can be charged, including a ban on overdraft, balance inquiry, customer service, inactivity and account closure fees
  • Grant assurance that consumers recoup prepaid card balances in case cards are lost or stolen, as well as grant cardholders Federal Deposit Insurance Corp. protections
  • Protects consumers' ability to choose the way they get paid (such as via payroll cards) or receive government benefit payments (benefit cards)
  • Direct the Consumer Financial Protection Bureau to issue regulations within 12 months of enactment of the bill into law, as well as undertake a study to determine the benefits to consumers of prepaid cards versus traditional bank accounts or other substitutes

Menendez stated, "I am reintroducing this legislation to give prepaid card users guaranteed federal consumer protections similar to those debit card users enjoy − for example, protections if a card is lost or stolen − and prevent card companies from hiding behind the fine print to raise their bottom lines at the expense of responsible consumers."

On Dec. 17, 2011, Menendez introduced in the U.S. Senate a similar bill designed to foster consumer protections and eliminate "hidden" fees on prepaid cards. The legislation, called the Prepaid Card Consumer Protection Act of 2011, targeted what Menendez called the "most egregious hidden fees" found on prepaid cards. The bill was also intended to protect consumers' funds if cards are lost or stolen, or if the provider goes bankrupt. In December 2010, Menendez introduced the same bill. end of article

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