Pew Report: GPR Card Fees Go Down, But Regs Still Needed (Feb. 10, 2014)
GPR card products are on the rise and have become more affordable over the last year, according to a new report from the Pew Charitable Trusts, which examined 66 GPR cards and compared the findings to a similar report in 2012. In the latest 62-page report, “Consumers Continue to Load Up on Prepaid Cards,” released Feb. 6, Pew found that consumer costs for GPR cards have decreased over the past year and, in many cases, GPR cards offer lower and fewer fees than basic checking accounts. “The large number of new GPR prepaid card offerings reflects a young market that is evolving and growing rapidly,” according to Pew’s report.
Almost all GPR cards now explicitly state that customers’ funds are covered by FDIC insurance, and though some disclose they are not, such disclosure is “much clearer” now than in 2012, Pew said. Many GPR card issuers voluntarily follow Pew’s best-practices guidelines for providing consumer protections outlined in its first report. But certain GPR cards also currently have inconsistent practices for handling overdrafts, according to Pew.
Pew recommends implementing new federal regulations to block the addition of overdraft or other automated or linked credit features to GPR cards. Pew also advises codifying rules to ensure GPR cardholders always have access to account information and transaction history; card fees and features are always explained in a uniform, concise and easy-to-read format and prepaid card funds are always federally insured. Pew also recommends eliminating binding arbitration clauses in cardholder agreements.
“While prepaid cards offer many benefits to consumers, they are a relatively new product with little oversight,” Susan Weinstock, who directs Pew’s research into consumer checking accounts, said in a press release. Pew noted that consumers loaded more than $64 billion onto GPR cards in 2012, up from $56.8 billion in 2011, citing data from Mercator Advisory Group.
A spokesperson for the NBPCA challenges Weinstock’s characterization of prepaid cards as having little oversight. “Prepaid cards are highly regulated by the CFPB and several other federal agencies, including Treasury, the OCC, Federal Reserve and at the state level,” the spokesperson says. “We’re glad to see Pew acknowledge the economic value and access to the financial mainstream prepaid cards offer consumers … But for Pew to continually suggest the cards aren’t regulated to protect consumers and funds is false and misleading.”
