Durham-based consumer advocate Reinvestment Partners released a report Monday calling for better consumer protections on prepaid debit cards.
The report states that even as the prepaid cards have grown in popularity, the fees and charges associated have become more disparate.
“Until all prepaid cards are safe, affordable, and fully functional they will still be a less-than-optimal substitute for a regular checking account," Reinvestment Partners research director Adam Rust said in a statement. "The reformed prepaid card will give consumers the services they need while protecting them from excessive fees, high-cost credit, and confusing disclosures.”
The organization is asking for a simple one-page disclosure form that lists the likely costs for users and all possible fees. It also lists eight principles that should be mandated:
- Prepaid cards do not come with either a line of credit or an overdraft capability.
- Costs less than regular checking. Fees provide value proportional to their costs.
- Full functionality equivalent to services of a traditional checking account.
- Offers widespread access to surcharge-free ATMs.
- Offers a suite of consumer protections that are equivalent to those provided for checking accounts.
- Comes with a standardized set of transparent and simple disclosures.
- Help the previously banked or the never-banked to gain access to other financial services
- Provide a means for a consumer to rebuild their credit.