Senator Menendez Strikes at Prepaid Again
It’s almost become a holiday tradition for Senator Robert Menendez (D-N.J.) to propose prepaid legislation in December. His previous attempts (in 2010, 2011 and 2013) went nowhere, but this time he proposed his bill in November. The Prepaid Card and Mobile Account Consumer Protection Act of 2015 (S 2315) was read twice on Nov. 19 and referred to the Senate Committee on Banking, Housing and Urban Affairs. More pressing issues, such as spending and cybersecurity, may put the bill on Congress’ back burner, however.
Sens. Jeff Merkley (D-Ore.), Richard Blumenthal (D-Conn.) and Elizabeth Warren (D-Mass.) are co-sponsors of the bill, which, despite its name, doesn’t address mobile accounts. The bill covers familiar ground, much of which the CFPB is likely to address in its prepaid rulemaking, scheduled to be released in March, according to the bureau’s latest agenda.
Among other provisions, the bill requires FDIC or NCUA insurance, has disclosure requirements, prohibits any credit feature and goes further than the CFPB proposed rulemaking with a long list of prohibited fees for what it terms “spending accounts,” including:
- Annual fee;
- Overdraft fee, including a fee for shortage or nonsufficient funds, or any other fee for a transaction processed for amounts exceeding the account balance;
- Usage fee for use at the point of sale;
- Declined transaction;
- Use of an electronic terminal that’s in the network of the issuer;
- Inactivity or dormancy, including a periodic fee charged after more than six months of inactivity;
- Balance inquiry or access to transaction information;
- Customer service inquiries;
- A finance charge or other fee imposed in connection with an extension of credit;
- An account closing fee or a fee to obtain the remaining balance in the spending account;
- Any fee prohibited by applicable state law; or
- Any fee of any kind that would cause the balance to become negative.
The bill also prohibits fees for any activity not listed in the bill as permissible, which includes fees for a replacement card, expedited delivery of a replacement card; a periodic fee, not more frequently than monthly; a reload fee (if the financial institution provides a reasonable alternate method for adding value to the spending account without a fee); transfers; bill payment; international or out of network ATM fees, foreign currency purchases/withdrawals; and an activation, initiation or enrollment fee.
Sen. Menendez’s bill also calls on the CFPB to conduct research—to be completed no later than one year after enactment—to determine whether there are any differences for short- and long-term economic well-being of consumers at different income levels who use spending accounts versus those who use traditional bank accounts.
- Menendez Introduces Prepaid Card Bill
- Menendez Prepaid Bill Encompasses Payroll and Gov’t Benefit Card
- Sen. Menendez to Propose Prepaid Legislation, Engages CFPB