You are here
US regulator pushes for more disclosure on prepaid debit cards: WSJ
[LONDON] US officials plan to unveil this week a comprehensive slate of consumer protections for prepaid debit cards, including fee disclosure and limits on overdrafts, the Wall Street Journal reported, citing people familiar with the matter.
The US Consumer Financial Protection Bureau's (CFPB) proposed rules, expected on Thursday, will have standards for how prepaid-card companies disclose fees and make it difficult for users to spend more money than they have loaded onto the card, the Journal said. (http://on.wsj.com/1zfTWne) The regulator is expected to issue a standard template for fee disclosure and ensure that consumers are protected from fraudulent transactions like other cards, the paper reported.
The CFPB is also likely to set limits on overdrafts, which allow customers - for a fee - to spend more money than they have loaded onto the card, the report said.
CFPB officials could not immediately be reached for comment outside regular US business hours.
The standards are being proposed as a large customer base use prepaid card and traditional financial institutions like JPMorgan Chase & Co and American Express Co are pushing into the business, the newspaper said.
The prepaid cards are mostly used by people without bank accounts. Some prepaid cards have attracted criticism for fees and the feature that allows consumers to borrow money using them, the report said.
It is too early to tell whether the these rules will hurt industry profit. They could affect companies that allow overdraft facilities, but most of the biggest players don't allow overdrafts, the paper said.
Last December, the CFPB called for banks to disclose their agreements with universities to market debit cards and other prepaid financial services to college students.