Consumers Union, the policy and advocacy arm of Consumer Reports, held a hearing Wednesday in North Carolina calling on the Consumer Financial Protection Bureau to adopt new rules that provide the same protections as traditional debit cards.
The group said industry competition is helping bring down fees but costs related to the prepaid cards aren't always disclosed up front and can add up quickly.
"The prepaid card market has exploded in the U.S. but consumers still don't enjoy the protections they need to ensure they are getting a fair deal," said Michelle Jun, senior attorney for Consumers Union, said in a statement. "It's time for the CFPB to require clear disclosure of all fees in a simple format so consumers know the costs before they purchase a card. Prepaid cards should get the same strong protections as traditional debit cards so consumers have the peace of mind that their money is safe if their card is lost or stolen."
Consumers Union said that the CFPB or the Federal Trade Commission should monitor credit building claims made by prepaid card issuers to ensure consumers aren't being misled. A Consumer Reports analysis found information from prepaid credit transactions is not useful in helping to build a credit record, the group said.