Federal regulators announced new rules Wednesday governing the quickly growing prepaid debit card industry, an effort more than two years in the making that should bring basic account protections to its customers, who are often financially disadvantaged. Prepaid debit card issuers will have to provide their customers with basic account information like balances and transaction history free of charge, the AP reports. Protections for lost or stolen cards will also be expanded to prepaid debit cards. Fees for the cards will have to be more clearly disclosed on the packaging.
Once a product whose only purpose was to function as a gift card, prepaid debit cards have become increasingly popular over the last 15 years and have effectively replaced a traditional checking account for millions of Americans. "Before today ... many of these products lacked strong consumer protections under federal law," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement. "Our new rule closes loopholes and protects prepaid consumers when they swipe their card, shop online, or scan their smartphone." (This inmate left prison with $120 on a prepaid debit card and found that staggeringly high fees left him with just $70.)