NEWARK, N.J. – As the leading advocate in Congress for increasing transparency and comprehensively protecting consumers from hidden fees and risks associated with prepaid cards and accounts, U.S. Senator Bob Menendez today applauded the Consumer Financial Protection Bureau (CFPB) for establishing and standardizing new federal requirements for companies that sell these financial products, including several provisions Menendez outlined in his Prepaid Card and Mobile Account Consumer Protection Act, first introduced in 2010.

“For years, as the prepaid card industry has exploded, financial companies have marketed them to consumers just like debit cards or checking accounts,” said Sen. Menendez. “But they aren’t. With fees and information hidden in fine print that make it impossible to comparison shop, prepaid cards they lack the same guaranteed federal protections consumers deserve. And that’s why I have been sounding the alarm and calling for the kind of common sense safeguards the CFPB finally announced today.”

Menendez first became aware of the risks associated with prepaid cards in 2010, when the Kardashian sisters endorsed a prepaid MasterCard which was laden with excessive, hidden fees. The Senator immediately wrote then-Special Assistant to the President Elizabeth Warren about his concerns and new legislation he would introduce to address them.

Menendez introduced the Prepaid Card and Mobile Account Consumer Protection Act in 2010, in 2013, and again in 2015. His bill would restrict the fees prepaid card issuers can charge, make prepaid card issuers clearly disclose all fees before customers buy a card, and protect consumers' money if prepaid cards are lost, stolen, or the card company goes bankrupt.

In May of 2012, Menendez wrote CFPB Director Cordray and outlined the same set of model standards from his legislation and urged the bureau to adopt them as part of its final rule.

Menendez called for the following provisions which were included in today’s CFPB announcement.

  • Full disclosure of fees and information before the consumer buys the card and a toll-free telephone number for customer service
  • Free and easy to access account information and transaction history including via telephone, online and in writing
  • Require financial institutions to investigate and correct account errors, including unauthorized or fraudulent charges
  • Provide provisional credit to consumers who allege error while investigation is ongoing
  • Protections for consumers in the case of loss or theft
  • Limits the fees and interest rates that companies can charge on prepaid accounts that offer overdraft features

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