CFPB’s New Rule Gives Protections to Prepaid Cardholders
Consumers have long suffered from a confusing landscape of inconsistent protections depending on whether they were using a credit card, a debit card, or a prepaid card. The good news is that situation is evolving and improving.
The U.S. Consumer Financial Protection Bureau (CFPB) has now issued a new rule relating to pre-paid cards, which went into effect this month. It establishes a number of rights for holders of pre-paid card accounts, including dispute privileges in the event of errors, loss or theft. In other words, prepaid cards will be treated much the same as credit and debit cards. The effort to equalize rights and protections between different charge card platforms is a welcome and timely step in the right direction.
Another benefit is that issuers of prepaid cards are now obliged to disclose their terms and conditions. That, in turn, will generate competition among them and make it much easier for consumers to select the deal that best meets their individual needs.