Prepaid cards are a growing segment of electronic payment that often function like debit or credit cards, but currently aren't regulated like them. The Consumer Financial Protection Bureau says it is changing that, requiring prepaid card providers to conduct some of the same credit checks and disclosures required of credit card providers.
"This rule closes loopholes and protects prepaid consumers," CFPB director Richard Cordray said today in a statement. "And it backs up those protections with important new disclosures to let consumers know before they owe."
Among other things, the rules, which take effect Oct. 1 of next year, require issuers to assess a user's ability to repay before extending credit. It would limit a user's liability in instances of unauthorized use, to $50. And, as with credit cards, it requires monthly statements and limits on late fees and other penalties to "reasonable" amounts proportional to the violation.