NEW YORK (
MainStreet) -- The Consumer Financial Protection Bureau hosted a town hall in New York City on Wednesday intended to elicit feedback on banks' overdraft policies, but the event's focus shifted when under-banked consumers took to the microphone to express discontent with their alternatives to traditional checking accounts, namely prepaid debit cards and check-cashing services.
The town hall, held at Hunter College, followed a
roundtable discussion that day in which consumer advocates and bank representatives shared their thoughts on the
CFPB'S inquiry into the overdraft practices being used by the nation's financial institutions.
|The Consumer Financial Protection Bureau's Richard Cordray says the agency will look into concerns about merchants such as Wal-Mart taking part in financial services.
"I switched to a prepaid account
to escape overdraft fees
," said Stacey Thompson, a New York resident, in the open forum. "I ended up with a negative balance on that card."
Agency head Richard Cordray did not respond directly to Thompson's complaints about her prepaid account, instead acknowledging that problems with traditional checking accounts can lead consumers to seek out oftentimes inferior solutions.
"Different banks charge different fees," he added later, when another consumer bought up high checking account minimums. "We want it to be easy for consumer to navigate the financial marketplace."
Retail giant Wal-Mart, which both prepaid debit cards and check cashing services, also incurred some criticism with several customers specifically asking the CFPB Director to regulate the retailer.
Cordray explained that federal law does not give the CFPB jurisdiction over merchants, but that the bureau does have the authority to regulate the financial services offered by merchants. He said the CFPB was going to look into the concerns and would "act, if appropriate."
Cordray did not say whether the CFPB planned to regulate the prepaid debit card industry, which has long been criticized by consumer advocates who say the cards offer high fees and low incentives to the unbanked or those who aren't creditworthy.
He did say the bureau would provide guidance to federal and state government agencies in terms of dealing with prepaid providers, after another consumer complained he was required to load his child support payments onto a prepaid debit card that was subject to fees.
"Some of these products are better than others," Cordray said, acknowledging these cards were often used in unemployment benefit programs.
The CFPB did not provide details as to whether additional inquiries into the complaints expressed by consumers at the town hall would be announced formally. CFPB spokeswoman Jennifer Howard did say the bureau expects to have a report and an action plan based on the overdraft inquiry's results available by the end of the year.
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