The disclosure box was designed by a non-profit group and is geared towards individuals without bank accounts as part of an attempt to improve the transparency of card usage. The prepaid cards work like debit cards except they are not attached to a checking account, Associated Press reports.
Recently, the Center for Financial Services Innovation urged regulators to improve disclosures pertaining to prepaid cards.
“Consumers need to be able to easily determine the true cost of a prepaid card and compare different products before deciding which to purchase,” David Newville, CFSI’s policy manager, said in a statement, according to the Associated Press. A standardized disclosure “will ultimately attract more consumers to prepaid cards.”
The three issuers testing the fee-disclosure box are Green Dot Corp., Plastyc Inc. and Ready Credit Corp.
Green Dot Corp. said that it plans to add the box to card packages in the fall.
Some consumer advocates have criticized prepaid cards, saying that the cards carry heavier fees than what a bank would charge for a comparable service. Research on behalf of the prepaid card industry reveals that many prepaid card users pay less than those who maintain low-balance checking accounts.
The Consumer Financial Protection Bureau, created as a consumer watchdog agency under the 2010 Dodd-Frank Act, is considering the addition of prepaid card companies to the list of regulated institutions. The CFSI has asked the CFPB to conduct consumer testing of prepaid disclosures.