Consumer Advocate Groups Put Prepaid Cards in Their Sights

According to an article that was written in the Wall Street Journal, a push to regulate prepaid cards is on many consumer advocate groups’ to do list. This is because, while credit cards, debit cards, and gift cards in one form or another are all slated to adopt the Credit Card Accountability, Responsibility, and Disclosure Act regulations; where as prepaid cards that are not linked with a traditional bank account are not.

Consumer advocates argue that the reasoning behind the push is simple and are largely based of two major points. The first being, that unlike credit cards, prepaid re-loadable cards aren’t covered by the federal statutes that protect credit cardholders from fraud or limit their losses when cards are lost or stolen. Secondly, they contend that disclosure is weak and in many cases non existent. Banks and prepaid card issuers, however, state that the advocates’ claims are not entirely true. In the United States, almost all prepaid cards are in some way connected with Visa or MasterCard, which offer cardholders zero liability and other protections against fraud. Also, many prepaid card companies offer some form of consumer protection; which in many cases is done voluntarily.

There is one thing that both consumer advocate groups and card issuers do agree on. They are in agreement that re-loadable prepaid cards are likely to become even more popular as many people turn away from traditional credit cards toward other financial options.