A new rule for prepaid cards will require financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers easy access to account information.
“Know Before You Owe” disclosures for prepaid cards also give consumers clear, upfront information about fees and other key details. In addition, prepaid card companies are required in most cases to offer protections similar to those for credit cards if consumers are allowed to use credit on their accounts to pay for transactions that they lack the money to cover.
“Many consumers rely on prepaid cards to make purchases and access funds, but until now they were not guaranteed strong consumer protections under federal law,” Richard Cordray, director of the Consumer Financial Protection Bureau, said Tuesday. “This rule closes loopholes and protects prepaid consumers when they swipe their card, shop online, or scan their smartphone. And it backs up those protections with important new disclosures to let consumers know before they owe.”