A consumer group is calling for prepaid cards to receive the same protections for consumers as standard debit cards.
Michelle Jun, a staff attorney with Consumers Union, wrote in a report last week that prepaid cards can be inferior to debit cards tied to checking accounts because they often carry several fees.
Moreover, not all prepaid cards provide adequate protection against fraud losses, Jun said in an interview.
Prepaid card issuers should provide fee information in a simple, comprehensive chart, Jun suggested. "Oftentimes you go to [issuer's] Web sites, … and you don't find the fees up front and center, and there are a lot of them," she said.
Issuers should cap the cost of using the cards monthly, she said.
Jun also said the consumer protections on prepaid cards should be comparable to those of traditional debit cards.
The recession has led more people, from all demographics, to use prepaid cards, she said. "Regardless of what population you're looking at, all consumers would be totally confused about the fees these prepaid cards have, mostly because they are not displayed prominently anywhere."
Jerry Welch, the chief executive of the prepaid card provider nFinanSe Inc. of Tampa, said the industry is still evolving. "There are a lot of practices that are going on now that are not going to get traction that ultimately consumers are going to push back on because it's not fair," Welch said.
Some prepaid card providers have lowered fees this year. In February, Wal-Mart Stores Inc. reduced its up-front, reloading and monthly maintenance fees to $3 each.
Green Dot Corp. and nFinanSe followed suit with their own price reductions.
