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Consumers Union Applauds CFPB for Adopting Strong Prepaid Card Rules

October 5, 2024         By: Mike Dautner

Consumers who use prepaid cards to make regular purchases and manage their money will receive important protections under new rules today by the Consumer Financial Protection Bureau.

The rules will help these specific consumers dodge costly fees and reinforce their ability to share in the same strong protections that come with traditional debit cards, according to Consumers Union, the policy and mobilization division of Consumer Reports.

“Millions of Americans rely on prepaid cards every day to pay their bills and manage their finances,” said Christina Tetreault, staff attorney for Consumers Union. “But not all prepaid cards are created equal and consumers have lacked the legal safeguards they deserve to protect their money. Now consumers will be able to compare cards more easily to find the most affordable option and have the peace of mind that their money will be safe if their card is lost or stolen.”

For several years, Consumer Union has lobbied for consumer protections on prepaid cards. An estimated one in four U.S. households rely on general purpose reloadable prepaid cards, which can be used exactly like a regular debit card linked to a personal bank account.

According to the Federal Reserve Board, prepaid cards are generally more sought after by consumers, however, pricey and unexpected fees deter them.

“Prepaid cards have become a mainstream payment option, but until now the law hasn’t kept up with their popularity,” said Pamela Banks, policy counsel for Consumers Union. “We applaud the CFPB for ensuring that consumers who rely on prepaid cards get many of the same strong legal protections that come with traditional debit and credit cards.”