Pew highlights prepaid shortfalls

US public policy research centre Pew Charitable Trusts has released a study highlighting aspects of the US prepaid card market that pose potential dangers to consumers, such as insufficient regulation, unclear fee disclosure practices and lack of federal insurance on deposits.Pew surveyed 52 general purposes prepaid (GPR) cards accounting for at least 75% of the US market in volume of transaction in 2011.The study points out that prepaid cards are not subject to some of the laws that apply to credit and debit cards, such disclosure of fees and of unauthorised electronic fund transfers terms and liability.This makes it difficult for consumers to compare and chose between products, according to the report. The cards surveyed in the report attract between 7 and 15 different fees, including charges for rejection at the point-of-sale or for calling an agent.The report also highlights how prepaid cards are not always covered by the Federal Deposit Insurance Corporation (FDIC) insurance, for example when they are issued by non-banks. These companies, pool prepaid deposits in a single account at a third-party bank, and cardholders are at risk of losing their funds if this bank fails.The report stresses the need for regulations to keep up with the fast growing prepaid industry. Pew forecasts the prepaid market to surpass USD200 bn in consumer assets by 2013.The centre hopes to see some of those issues addressed in the consultation on prepaid cards launched by the federal agency Consumer Financial Protection Bureau in May 2012.