In a research paper entitled The 8 Principles for the Reform of the Prepaid Card, Rust said one EPA disclosure box is used to help people estimate the cost savings associated with home heating and cooling products. The EPA Energy Guide disclosure is a sticker that can be applied to a new household appliance, such as a refrigerator. The sticker offers a graph that compares the energy efficiency of the refrigerator to a range of similar refrigerators.
Rust pointed out that the sticker provides not just information about the particular appliance, but also other factors, such as family size and room size. Additional physical environments are also taken into account, like the regional location of the home where the appliance resides.
Another EPA disclosure box is a mileage efficiency sticker that affixes to new automobiles. The sticker provides information such as the fuel efficiency and annual fuel costs of the car model under question. The sticker also comes with a QR code that, when scanned by a consumer's smart phone camera, takes the consumer to a web page where more detailed information about the car is available in a box format.
Reinvestment Partners incorporated aspects of both EPA models into its own Card Star fee disclosure model. The initial box presented to consumers comes in four user group models, two of which are for everyday users of prepaid cards and for infrequent users. The box provides a graph that estimates the total monthly cost in fees of a particular card and places that total in context with the totals of similar cards.
Below the graph are four boxes that detail the fee to buy the card, where to load value onto the card, the minimum load value for the card and the surcharge-free ATM network that accepts the card. The box also displays a QR code linked to a detailed disclosure box online that describes the card's costs, its functions and its safety features.
The detailed disclosure box is broken down into such categories as "Add Money," "Get Money," and "Spend Money." Another category is "What This Card Will Do," which lists the features of the card, such as if it allows for online bill pay, a savings account and a credit building capability. Rust envisions QR codes on the prepaid card packaging to provide smart- phone users with access to disclosure information at the POS.
Rust said a problem with prepaid cards is that consumers are not given an adequate way to comparison shop. "Since there is so much variation in how frequently the cards are used, comparing prices is very difficult," he said. It is therefore Rust's conclusion that the Schumer Box, which was used as the model for the Center for Financial Services Innovation standardized fee disclosure box (for more information, see "Demands of a standardized fee disclosure box," SellingPrepaid E-Magazine, April 12, 2012, issue 12:04:A), is "the right inspiration but the wrong model."
By offering cost estimates on prepaid cards for four different consumer groups and visual graphics designed to help consumers evaluate prepaid cards, the EPA-inspired Card Star model is a better model for prepaid card disclosures, Rust said.
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