Pew Unveils Model Disclosure Box for Prepaid Cards

Navigate to:

Pew Unveils Model Disclosure Box for Prepaid Cards

Proposed Feature Highlights Fees, Terms, and Conditions in an Easy-to-Read Format

WASHINGTON—The Pew Charitable Trusts introduced a model disclosure box today for general purpose reloadable prepaid cards that provides information on terms and conditions in a concise and easy-to-read way to make it easier for consumers to compare the cards and avoid unexpected fees.

A general purpose reloadable prepaid card is a relatively new financial product that is growing in popularity: a card that functions like a debit card but is not attached to a traditional, individual checking account. The cards can be used at ATMs, retail cash registers, and online. Americans loaded more than $64 billion onto the cards in 2012, more than double the amount loaded in 2009.

“The disclosures for most prepaid cards are inconsistent and unclear,” said Susan Weinstock, director of Pew's safe checking research. “Terms should be plainly stated so that consumers can choose the product that best meets their needs. This disclosure box should be required by the Consumer Financial Protection Bureau for all general purpose reloadable prepaid cards.”

The model disclosure box is presented in a new Pew study, “The Need for Improved Disclosures for General Purpose Reloadable Prepaid Cards,” which details the lack of transparency in current card disclosures. Nearly every one of the 66 cards included in the study failed to disclose at least one type of fee, service, or consumer protection.

The disclosure box fits on existing prepaid card packaging so that it can be available before purchase at retail outlets as well as online. The format is based on Pew's disclosure box for checking accounts, which has been adopted by 26 banks and credit unions covering almost 50 percent of domestic deposit volume. Uniform, concise, and easy-to-read disclosures will help consumers compare the terms and conditions among prepaid products, as well as between those products and checking accounts, so that they can make fully informed decisions.

The rising popularity of prepaid cards has not been matched by increased protections for consumers, however. In its report, released this month, Pew provided the following policy recommendations to the Consumer Financial Protection Bureau to make the cards safer:

  • Prepaid cards should not have overdraft or other automated or linked credit features.
  • Prepaid cardholders should be protected against liability for unauthorized transactions that occur when a card is lost or stolen or a charge is incorrectly applied. 
  • Prepaid cardholders should have access to account information and transaction history.
  • Prepaid cards should be required to provide information about terms, conditions, and fees in a uniform, concise, and easy-to-read format. This information should be included with the card packaging so that it can be reviewed before the card is purchased at retail outlets as well as online.
  • Prepaid card funds should be federally insured against loss caused by the failure of an institution.
  • Pre-dispute binding arbitration clauses in cardholder agreements, which prevent customers from challenging unfair and deceptive practices or other legal violations in court, should be prohibited.
To conduct this work, Pew examined disclosures and fee structures of 66 general purpose reloadable prepaid cards. Pew researchers looked at all of the documents and disclosures available through the websites of American Express, MasterCard, Visa, and the 10 largest retail banks that offer a prepaid card. Pew hosted focus groups with consumers in Baltimore, Denver, and Austin, TX. Pew also recently published a national survey of prepaid card users.

The Pew Charitable Trusts is driven by the power of knowledge to solve today's most challenging problems. Pew applies a rigorous, analytical approach to improve public policy, inform the public, and stimulate civic life. 

Spotlight on Mental Health

Cards

This video is hosted by YouTube. In order to view it, you must consent to the use of “Marketing Cookies” by updating your preferences in the Cookie Settings link below. View on YouTube

This video is hosted by YouTube. In order to view it, you must consent to the use of “Marketing Cookies” by updating your preferences in the Cookie Settings link below. View on YouTube

Get Your Hands on a Better Prepaid Card
Related Issue Brief
19x9 placeholder
The Need for Improved Disclosures for General Purpose Reloadable Prepaid Cards
Data Visualization

Who Reads 44 Pages of Disclosures?

The Need for a Disclosure Box

Quick View
Data Visualization

The Need for a Disclosure Box

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

Pills illustration
Pills illustration

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.

Quick View

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.

Explore Pew’s new and improved
Fiscal 50 interactive

Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:

  • Maps, trends, and customizable charts
  • 50-state rankings
  • Analysis of what it all means
  • Shareable graphics and downloadable data
  • Proven fiscal policy strategies

Explore

Welcome to the new Fiscal 50

Key changes include:

  • State pages that help you keep track of trends in your home state and provide national and regional context.
  • Interactive indicator pages with highly customizable and shareable data visualizations.
  • A Budget Threads feature that offers Pew’s read on the latest state fiscal news.

Learn more about the new and improved Fiscal 50.