The use of prepaid cards in America has grown rapidly over the last few years. Many people rely on these types of cards as an alternative to traditional banking accounts. However, those who use the cards do not enjoy the same type of protection as those who use debit cards. There are numerous hidden fees that many consumers do not know about, and they lack protection if their card is lost or stolen.
The Consumers Union, the policy and advocacy arm of Consumer Reports, is lobbying the Consumer Financial Protection Bureau to create new rules that protect consumers who use prepaid cards. A field hearing is being held by the CFPB in Durham, North Carolina to discuss prepaid cards.
Consumer Reports shows that while industry competition is beginning to help lower the fees associated with the prepaid cards, the fees are rarely disclosed up front. Also, the prepaid cards offer little in the way of consumer protection.