Financial institutions generally support the Federal Reserve Board's proposal to exempt most stored-value cards from consumer protection rules but urge no rule be adopted now.

In 115 comment letters filed by the Sept. 6 deadline on the rule containing the exemption, many banks said it was too soon to impose even limited restrictions on the cards.

Chase Manhattan Bank urged the Fed to delay adopting its proposal. Imposing regulation now may "substantially skew product development," wrote the bank's vice president and assistant general counsel, Robert J. Egan.

It "is almost impossible to tell where technology will be ... in two years," wrote Michele K. Mulder Spear, second vice president and legal counsel of Detroit's NBD Bank, a subsidiary of First Chicago NBD Corp. She advised the Fed to "wait several years" before imposing any regulation.

"Citicorp believes that the board has tailored the proposed rule too closely to the characteristics of the few products that are already on the market and, as a consequence, has proposed regulations that could stifle the market development of alternative products and technologies," wrote Carl Howard, the company's assistant secretary.

The American Bankers Association acknowledged that the Fed proposal "largely imposes minimal and acceptable requirements." But Nessa E. Feddis, the group's senior federal counsel, added: Factors "other than a regulation should dictate the architectures of these new payment systems."

The Fed proposal, released in May, would impose varying restrictions on stored-value cards, depending on their maximum monetary value, their connection to a central data base, and whether authorization is required to use the card.

Cards of any type that are worth $100 or less would be exempt from Regulation E's consumer protections.

Cards with more than $100 of value that aren't connected to a central data base and need no authorization also would be exempt from Regulation E, but issuing companies would have to disclose terms and conditions of the accounts when they are opened.

Cards worth more than $100 and, like debit cards, requiring on-line authorization would have to comply with major consumer protections. Issuers would be required to tell consumers the extent of their liability for unauthorized transfers, the procedures for rectifying mistakes, and fees for certain transactions. Issuers also would be prohibited from sending unsolicited cards to consumers.

Many banks urged the Fed to raise the $100 threshold. MBNA Corp., Wilmington, Del., suggested cards worth $500 or less should be exempted from Regulation E. "Encouraging financial systems to limit on-line stored- value systems to $100 will inconvenience consumers," wrote MBNA's executive vice president and legislative counsel, Joseph R. Crouse.

The $100 threshold is "too low to be significantly useful to most financial institutions and their" customers, wrote Robert R. Davis, director of government relations at America's Community Bankers. The trade group suggested a threshold of $300.

Consumer groups, too, were concerned that the Fed proposal could encourage a proliferation of low-value cards.

People using small-value cards may find themselves reloading them frequently, which could produce a "fee-income bonanza for issuers," said Ruth Susswein, executive director of Bankcard Holders of America.

Ms. Susswein urged the Fed to strengthen its consumer protections and apply them to all cards, regardless of value.

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