The category of prepaid cards is one of the fastest growing financial products in the U.S., especially as an alternative for consumers who may have trouble accessing traditional checking accounts.
These alternative prepaid accounts can be loaded with funds by either a consumer or a third party, allow people to make payments, store funds, withdraw cash, receive direct deposits, and send funds to other consumers, according to the Consumer Financial Protection Bureau (CFPB).
However, prepaid account complaints are also on the rise, the CFPB says.
As of Feb. 1, 2016, the Bureau has handled about 4,300 prepaid product complaints.The CFPB featured prepaid card accounts in this month’s review of overall consumer product complaints released today.
Some of the CFPB findings related to prepaid complaints include:
Inability to access funds on card: Consumers complained they were unable to access funds loaded on their prepaid cards for an extended period of time.
Prepaid cards re-issued without former balance: Consumers complained that when their prepaid cards expired, the company that issued the initial card often refused to re-issue a card with the remaining balance before their original card expired.
Account access problems when disputing particular charges: Customers who wanted to dispute an unexpected charge complained that after contacting the company about the issue, the entire balance on their card would be frozen while the claim was under review. The claim process could often take an extended period of time, during which the consumer would be unable to access important funds.
Fees when using prepaid cards: Some consumers complained about a wide variety of charges, including: monthly, inactivity, transaction, balance inquiry, PIN change, and overdraft fees.
In November 2014, the CFPB proposed rules to protect consumers using prepaid products. Final rules on prepaid products are expected to be published in 2016. A large number of the prepaid product complaints the Bureau has received in recent months are related to Empowerment Ventures, LLC., parent company of RushCard.