CFPB finalizes protections for prepaid account users

The Consumer Financial Protection Bureau last week finalized consumer protections for prepaid account users, which are among the fastest-growing consumer financial products in the United States.
The federal regulator’s new rule requires financial institutions to “limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors and give consumers free and easy access to account information,” according to a press release.
The new rule also finalizes a “know before you owe” clause, which is designed to give prepaid account consumers clearer information about fees and other details related to the accounts.
“Many consumers rely on prepaid cards to make purchases and access funds, but until now they were not guaranteed strong consumer protections under federal law,” said CFPB Director Richard Cordray. “This rule closes loopholes and protects prepaid consumers when they swipe their card, shop online or scan their smartphone. And it backs up those protections with important new disclosures to let consumers know before they owe.”
The popularity of prepaid cards has grown rapidly in the United States, as the amount put on cards grew to nearly $65 billion in 2012 from $1 billion in 2003. The CFPB projects that amount to nearly double to $121 billion by 2018.
The federal regulator summarizes the full extent of the new rule.

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