'Tis the Season for Prepaid Debit Card Hidden Fees: Menendez Introduces Legislation to Protect Consumers
Statement
Durbin, Merkley co-sponsor Prepaid Card Consumer Protection Act "Open loop" prepaid card market estimated to grow by $175 billion over three year period
As consumers flock to retailers during the holiday season and as the use of prepaid debit cards continues to expand rapidly, Senators Robert Menendez (D-NJ) today introduced new legislation to curb hidden fees associated with many of these cards. Co-sponsored by Senators Richard Durbin (D-IL) and Jeff Merkley (D-OR), the Prepaid Card Consumer Protection Act will eliminate some of the most egregious hidden fees, increase fee transparency for consumers and increase consumer protections.
This effort comes at a time when the usage of and reliance on prepaid cards is booming. According to an analysis by Mercator Advisory Group, the amount loaded onto "open loop" prepaid cards will increase 383 percent between 2009 and 2012, from $60.4 billion to $233.8 billion.
"This holiday season, the weather outside isn't the only thing frightful for shoppers," said Menendez. "Responsible consumers are finding out the hard way that the purchasing power of many prepaid cards, is often much less than the dollar amount they loaded onto them. We need to ensure that families who rely on prepaid cards are not surprised by hidden fees and are not hit with fees that are totally unnecessary."
"Earlier this year, we began to rein in the abusive fees prepaid cards often charge consumers by ending overdraft fees and fees charged for the first monthly ATM withdrawal," Durbin said. "These changes, however, are just the first step. Today's legislation builds on the changes we've already begun to make and creates a new framework to ensure consumers aren't fleeced by prepaid cards."
"In the classic Dr. Seuss story, it was the Grinch who stole Christmas. Today, it's hidden fees inside seemingly innocent pre-paid debit cards," said Oregon Senator Jeff Merkley. "This legislation cracks down on practices that strip wealth from working families and protects consumers from these unscrupulous deals."
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