A new bill has been introduced in the Senate that will curb hidden fees associated with prepaid cards.
Sen. Robert Menendez (D-N.J.) introduced the bill, known as The Prepaid Card Consumer Protection Act. It would require card issuers to disclose to consumers what fees are before they purchase cards. It would also require them to guarantee customers’ their money back if the cards are lost, stolen or if the company goes bankrupt.
“This season, its hidden fees that are making for a Blue Christmas,” Menendez said. “Unsuspecting consumers are finding out the hard way that prepaid cards often give you much less than the dollar amount you load onto them thanks to unnecessary fees. We need to ensure that families who rely on prepaid cards are not surprised by hidden charges."
Menendez advocated for prepaid card transparency for several years. His latest legislation comes at a time when the usage of prepaid cards is peaking. According to a study conducted by Mercator Advisory Group, the amount loaded onto “open loop” prepaid cards is expected to rise 383 percent between 2009 and 2012 from $60.4 billion to $244.8 billion.
“Now that prepaid cards are becoming increasingly popular, Congress must act to rein in the high fees, and make sure consumers get the protections they deserve,” Chuck Bell, the programs director of Consumers Union, said. “We commend Sen. Menendez for his leadership in introducing this important legislation, which we hope will be swiftly enacted by Congress.”