New Menendez bill targets prepaid fees

A year ago Sen. Robert Menendez, D-N.J., sponsored the Prepaid Card Consumer Protection Act of 2010. On Dec. 17, 2011, Menendez introduced a similar bill designed to foster consumer protections and eliminate "hidden" fees on prepaid cards. The legislation, called the Prepaid Card Consumer Protection Act of 2011, targets what Menendez called the "most egregious hidden fees and let consumers know what the fees are before they buy the cards."

The bill, which also intends to protect consumers' funds if cards are lost or stolen or if the deposit holding company goes bankrupt, would require:

• Full disclosure of fees before consumers buy prepaid cards
• Limits on the types of fees that can be charged
• Consumer protections for prepaid cards
• The Consumer Financial Protection Bureau to issue regulations within nine months of the bill's enactment into law

Part of the disclosure requirements is that prepaid card providers issue wallet-sized summaries of fees associated with programs. The bill - S. 2030 - prohibits a number of fees from being charged, including annual, overdraft, usage (at the POS), dormancy, balance inquiry and customer service fees.

Additionally, Menendez wants debit card consumer protections extended to prepaid cardholders, namely Regulation E to the 1978 Electronic Fund Transfer Act and Federal Deposit Insurance Corp. protections.

Consumer advocacy group Consumers Union, as well as the New Jersey Public Interest Research Group, came out in favor of the legislation.

The 2010 bill failed to gain traction in Congress. A spokesman at the senator's Washington office told SellingPrepaid that the 2011 bill is not materially different from the 2010 version.

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