The Consumer Financial Protection Bureau recently announced that it will hold a hearing on prepaid cards, which may indicate the agency’s preparedness to bring the prepaid card industry into the fold of stricter oversight.
Entities that will likely come under the supervision of the CFPB include private student loan lenders and payday loan lenders. Though the agency has primarily targeted credit reporting firms and debt collection agencies in its “larger participant” proposal unveiled in February, the CFPB did clarify during the proposal discussion that other market participants would eventually be included under the new supervision.
The CFPB currently defines larger participants as those debt collection agencies with more than $10 million in annual receipts and credit reporting firms with more than $7 million in annual receipts.
In October, however, the Small Business Administration issued a proposal to revise the threshold for both industries to $14 million, as those businesses with $10 million in annual receipts are subject to strict CFPB oversight but considered by the SBA to be small business concerns.
The prepaid card market has recently enjoyed increased popularity as under-banked and un-banked consumers seek alternate options to traditional banking. A 2012 survey conducted by the National Foundation for Consumer Credit Counseling revealed that approximately 13 percent of Americans use debit cards to complete everyday transactions.