Congress took bold steps to reign in unfair credit card practices, passing the Credit Card Act of 2009. Thousands of consumers who saw their interest rates jacked up, their credit lines scaled back and their fees skyrocket, watched as President Barack Obama signed the bill into law. Crowds cheered, lawmakers looked pleased, and a new law hit the books. But card holders shouldn’t become complacent just yet, or think that abusive practices are gone from the financial landscape.
There is one kind of card, say consumer advocates, that managed to escape any regulation: prepaid cards. You know which ones I am talking about. These cards seem harmless enough. They are often prepaid, and tied to a major retailer. They might even come with a pleasing logo on the front and the promise of savings.
But these cards don’t fall under those cards covered by the new law. Only cards that are tied directly to banks boast real consumer protections.
These prepaid cards have grown in popularity in recent years, and as more consumers swipe, more advocates are worried that the protections are far to flimsy. Some prepaid cards do come with protections against fraud, or theft, but those aren’t mandated by law. Also, sometimes cards come with high activation fees, and very little disclosure about billing details.
Consumer advocates have been calling for protections to be added. Given the trickiness and complexity of billing practices, those protections are crucial.