The Electronic Funds Transfer Act applies to debit cards but DOES NOT apply to general purpose reloadable prepaid cards. Many unbanked people are being urged to buy and use these plastic payment cards. People who load money on these cards have to rely on voluntary industry protections to resolve errors or limit liability for lost or stolen cards and unauthorized use of the funds on the card. The issuers could change the rules at any time.
Consumer Action is calling on the Consumer Financial Protection Bureau to extend Electronic Funds Transfer Act (Regulation E) protection to general-purpose prepaid cards.
Reg E provides mandatory protections for consumers using debit cards, including a cap on how much money consumers can lose if their card is lost or stolen or when unauthorized charges are made; a guarantee that missing money will be credited back promptly after the cardholder notices and reports the loss; clear and conspicuous disclosures of all fees and costs before signing up to use the card and the right to receive a statement or transaction information. In addition, consumers have the right under Reg E to avoid overdraft fees for single, non-recurring debit transactions.
Sign our petition to extend Reg E protections to prepaid cards!