With the busiest shopping season of the year underway, and with an estimated $427.5 billion expected to be placed on prepaid debit cards by American consumers next year, U.S. Senator Robert Menendez (D-NJ) is targeting hidden and excessive fees associated with these cards. Menendez recently sent a letter to Presidential Special Assistant Elizabeth Warren, seeking to work with her and the new Consumer Financial Protection Bureau on issuing commonsense regulations for prepaid cards that would protect consumers relying on them for purchases from getting fleeced.
In addition, Menendez announced that he will introduce new legislation before the end of the Congressional session to eliminate certain prepaid debit card fees and provide consumers with full, upfront disclosure of fees before they purchase the cards.
“For too many consumers using prepaid debit cards, Black Friday may have put them in the red because of surprise and unreasonable fees,” said Menendez. “Responsible consumers are finding out the hard way that the purchasing power of these cards is often much less than the dollar amount they loaded onto them. Consumers should be equipped with full information about cards they buy, and we should eliminate some of the most egregious fees, which is what I intend to accomplish through legislation and working with federal consumer protection regulators.”
Prepaid cards are typically reloadable plastic cards used as substitutes for checking accounts, debit cards, or credit cards. Many come with a mountain of fees and very poor disclosure of those fees, terms, and conditions. They typically do not have the same guaranteed consumer protections as credit cards and debit cards, although they are marketed and used as substitutes for credit cards and debit cards.