Regulators expand protections to prepaid debit card users
NEW YORK - Federal regulators announced new rules Wednesday governing the quickly growing prepaid debit card industry, an effort more than two years in the making which should bring basic account protections to its customers, who are often financially disadvantaged.
Prepaid debit card issuers will have to provide their users with basic account information like balances and transaction history free of charge to customers. Protections for lost or stolen cards will also be expanded to prepaid debit cards. Fees for the cards will have to be more clearly disclosed on the packaging.
Once a product whose only purpose was to function as a gift card, prepaid debit cards have become increasingly popular over the last 15 years and have effectively replaced a traditional checking account for millions of Americans.
Sold in most grocery or convenience stores, the cards are largely used by lower income Americans, who are statistically more likely to be young, a racial minority and likely to earn less than $25,000 a year, according to the Pew Charitable Trusts.
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