CFPB Stretches Bank Rules to Cover Prepaid Cards, Mobile Payments
by Sheryl Harris, The Plain Dealer (Cleveland, Ohio)
Consumers who use prepaid cards or make mobile payments are about to get super-sized protections against fraud, errors and overdraft fees.
The Consumer Financial Protection Bureau said Thursday it plans to extend many of the protections consumers have when they use traditional bank products to include a wide range of prepaid accounts.
Those products include use-anywhere prepaid cards, campus cards used for financial aid disbursements, tax-refund cards, some government-benefits cards and prepaid cards that some companies use to pay employees.
But the rules also scoop up card-free mobile payment products such as Google Wallet.
This year, $100 billion is expected to be loaded on prepaid cards. That’s a huge market – one that often puts consumers at the mercy of card issuers if something goes wrong.
Although many people use prepaid cards as add-ons to their regular bank account, people who are “unbanked” rely on them heavily. In a recent report, the FDIC found that people without bank accounts turned to prepaid cards in greater numbers and with greater frequency than other consumers.