Feds Collect Prepaid Card Complaints

The Consumer Financial Protection Bureau (CFPB) has released its monthly report on consumer complaints, and this edition focused on prepaid products.

Prepaid cards are increasingly popular among folks who are underbanked and unbanked, as they can be used as alternatives to traditional checking accounts. The CFPB is invested in making sure that prepaid cards and other products are being used appropriately, and that consumer complaints are handled adequately.

Richard Cordray, the director of the CFPB, explained in a statement: “For many…prepaid products are a vital source of financial security. “We want to make sure consumers using prepaid products can easily access their funds and companies are working to resolve consumers’ issues.”

The top three complaint-getters

As of October 1, 2016, the CFPB had fielded about 6,000 prepaid product complaints. These included unauthorized transactions, complaints about difficulty registering and using cards, and trouble resolving problems when they occurred. Folks said there were often long delays in getting credit back to their cards after fraudulent transactions.

The three companies that logged the most complaints were America Express, PayPal, and NetSpend. American Express offers several very popular prepaid products, including Bluebird and Serve. The sheer volume of use on these prepaid cards may have something to do with the frequency of the complaints.

For the most part, consumers seem very happy with America Express prepaid products, which offer low fees and easy ways to send and receive funds. With prepaid cards, folks can get cash from an ATM, receive direct deposits from their employers, send money to friends and family, pay bills online, and pay for purchases just as they would with a credit card. The difference is, funds are loaded onto the card in the beginning, rather than incurring debt through a line of credit.

Fees can be avoided

Prepaid cards typically have a monthly fee, but some, including Bluebird from American Express, don’t charge any fees. Some waive their fee if you perform a specific action, such as doing online bill pay, or receiving a direct deposit each month. They are especially useful for young people, whose parents may give them to them as allowance. Kids as young as 13 are eligible to get a prepaid card, and parents can see the account activity so they can help them regulate their spending.

The CFPB monitors many types of payment products, and folks can log onto their website at any time to file a complaint.