Prepaid more mainstreamIn July 2014, market research company GfK published its latest review of the prepaid market, and found that 60 percent of Americans had used such a card during the previous 12 months. However, that number included branded gift cards, government benefit cards, payroll cards and student cards, as well as "general purpose reloadable cards (GPRCs)," the ones most of us think of when we talk of prepaid debit cards. Only 16 percent of GfK's sample had used any prepaid card aside from a gift card. While this suggests that GPRCs still have a way to go, other data from industry body the Network Branded Prepaid Card Association may indicate growth potential. The association asserts:
- People with annual incomes in excess of $100,000 are using prepaid cards at comparable rates to those of less affluent consumers.
- Relatively high satisfaction rates of about 70 percent are to be found across income groups and generations.
Brakes on growthLess than two years ago, IndexCreditCards.com warned readers of the dangers of GPRCs, in particular, high costs, sneakily hidden fees, minimal consumer protections and a near-total lack of regulation. Things have changed to some extent since then, but -- while a number of reputable companies are now offering good products -- there is still little to stop rogue players from ripping off consumers. Indeed, it was only on July 21, 2014, that federal regulator the Consumer Financial Protection Bureau began to accept complaints from the public about prepaid products. And there's still no serious regulatory structure in place. As The Pew Charitable Trusts reported in February 2014:
...there are no federal laws or regulations that directly protect consumers from hidden fees, liability for unauthorized transactions, or loss of funds in the event of an issuing institution's failure. Nor are there federal rules requiring these cards to provide disclosures of fees, terms, conditions, or dispute resolution practices.