WASHINGTON — The Consumer Financial Protection Bureau said May 22 that it plans to issue a rule to expand Regulation E consumer protections for prepaid cards.
Although some protections already apply to certain kinds of prepaid cards, such as gift or payroll cards, the agency is proposing to extend the rules to general purpose reloadable cards.
In an advanced notice of proposed rulemaking issued late Tuesday, the bureau said it will evaluate how fees and terms for those cards should be disclosed, the costs and benefits of requiring providers to protect consumers from unauthorized transactions, and the issues related to special card product features, such as small dollar loans or lines of credit.
CFPB Director Richard Corday said that prepaid card users are some of the most vulnerable consumers.
"All consumers need, and deserve, products which are safe and whose costs and risks are clear upfront," Cordray said in a press release. "Yet right now prepaid cards have far fewer regulatory protections than bank accounts or debit or credit cards. That's why we are launching a rulemaking to promote safety and transparency in this emerging market."
The popularity of general purpose reloadable cards has skyrocketed in recent years, with many consumers now using them in a manner similar to a debit card that is linked to a checking account, the agency said.
The bureau is hosting a field hearing on the prepaid card market in Durham, N.C., on Wednesday. It also launched an interactive tool,
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