Whether we like it or not, the Consumer Financial Protection Bureau (CFPB) has been on a real tear lately. They are going after industries they don’t like and formulating new regulations for said industries as we speak. The CFPB also takes time to release monthly reports to account for some of their activities. The latest report was a monthly snapshot that focused on prepaid products. These financial products have been hot as of late, so it is easy to understand why the CFPB would make them the focus of one of their public reports. According to the report, the number of consumer complaints have increased as these cards have become more popular. Consumers have complained about getting locked out of their accounts, among other things. The newest snapshot also features some trends that have been seen in Texas as of late. As it stands right now, the CFPB has taken over 810,000 consumer complaints for all types of financial products and services.
The Director of the CFPB Richard Cordray said, “Prepaid products provide a crucial financial lifeline to many unbanked and under-banked households. is important that consumers who rely on this important financial product can do so safely and efficiently, without undue hassles and runarounds.”
Industry experts have remarked about prepaid products becoming the fastest growing consumer financial products on the market today. For many, getting a prepaid card is an alternative when they are unable to get traditional checking accounts. These alternative accounts, which consumers can load with funds or purchase already loaded, allow folks to make store payments, hold their money, withdraw cash from ATMs and even receive direct deposits to their accounts. Back in November of 2014, the CFPB made some proposals about rules that would protect users of prepaid products. The final rules from the bureau are expected to come out some time this year. A large portion of the prepaid product complaints have been related to the parent company of RushCard, Empowerment Ventures, LLC.
About 4,300 prepaid card complaints have been received by the CFPB since February 1st, 2016. The complaints include:
- Consumers being unable to access the funds on their cards. Many people complained that they had funds loaded on their cards for long periods of time, but were unable to use them.
- Cards getting re-issued to consumers without their former balances. Consumers logged complaints about cards expiring and being unable to get their existing funds on reissued cards.
- Account access issues when charges are being disputed. Prepaid card users who have tried to dispute charges on their cards have complained that when they did so, their entire card balances were frozen until the claim was reviewed.
- Prepaid card fees. Many consumers have logged complaints about having to pay a lot of different fees on their accounts. The fees included – monthly fees, inactivity fees, transaction, PIN change and even overdraft fees.
The list of complaints that have come in so far, are very similar to the types of complaints that you might see logged about traditional banks, credit cards or other types of standard financial products. Of course, that is to be expected, since all financial products have certain things in common. And like the other, more established financial products out there, consumer dissatisfaction issues related to prepaid credit/debit cards are sure to increase as the products, themselves, grow in popularity. Consumers should always read the agreements that come with these types of products in order to make sure that they understand all of the fees, terms and legal jargon associated with purchasing and using prepaid financial products.