A Treasury Department official has revealed that the Consumer Financial Protection Bureau may ask this spring for public comments in order to reevaluate fee disclosure by prepaid debit card issuers, according to a Bloomberg report this week.
Prepaid debit cards are the fastest-growing area of the payment card sector. Bloomberg added that the Treasury official believes the bureau is examining disclosure and does not intend to limit fees.
David Silberman, who leads the card markets unit at the bureau, has been holding one-on-one meetings with prepaid industry representatives, the Treasury official claimed.
Elizabeth Warren, the Treasury adviser tasked with launching the bureau, brought up the subject in a Nov. 30 letter to Senator Robert Menendez (D-NJ), whose prepaid card regulation bill failed.
“We need prudent regulation to stimulate a transparent and competitive marketplace in which consumers are able to understand the product, figure out the costs, and comparison shop for the products that best meet their needs,” Warren said in the letter, according to Bloomberg.
During the process of drafting the Dodd-Frank financial overhaul bill, Congress had considered imposing new “swipe fee” regulations on prepaid cards as well as debit cards. Hip-hop mogul Russell Simmons, who issues the prepaid RushCard, was among those who lobbied to exempt the cards.
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Bloomberg reports that new prepaid regulations could threaten the $1.4 billion in fee profits that Aite Group estimates companies, such as Wal-Mart, Green Dot and NetSpend, will earn by 2014. By then, Americans will have more than tripled the amount they add to their cards annually to $104 billion, according to Aite. (Read more)
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