The Financial Health Network is submitting this letter in response to the request for comment by the Consumer Financial Protection Bureau on May 24, 2012. We appreciate the opportunity to respond to the CFPB’s notice and request for comment on general purpose reloadable (GPR) prepaid cards including their costs, benefits, and risks to consumers.
The Financial Health Network is a nonprofit organization, in our ninth year of providing national leadership, research, and insights on the financial services needs of underserved consumers. We conduct consumer and industry research to develop a broad understanding of consumers in this segment and the products offered to them. We invest in nonprofits and for-profits serving underbanked consumers with sustainable, innovative financial products and services. And we advance federal financial services policy to spur product innovation and market competition and address impediments to accessing high-quality financial services. Our vision is to see a strong, robust, and competitive financial services marketplace, where the diversity of consumer transaction, savings, and credit needs are met by a range of providers offering clear and transparent products and services at reasonable prices.
The Financial Health Network has been studying the evolution of the prepaid card industry since 2004 and supported the development of high-quality and affordable GPR prepaid card accounts as a valuable and necessary tool for the financially underserved. Our work over the years has included research on industry practices and the development of these products, as well as detailed research on consumers use and views on GPR prepaid cards.Recently, the Financial Health Network has also conducted research and analyzed the extension of consumer protections to GPR prepaid card accounts. This work has involved consultations with a wide variety of stakeholders, including policymakers, consumer advocates, and industry representatives. Last year we released our recommendations on extending consumer protections to GPR prepaid cards, which included requiring FDIC pass-through insurance, extending Regulation E as it is applied to payroll cards, and improving fee disclosure for these products. Earlier this year, we released detailed recommendations for improving fee disclosure in the form of a model fee disclosure box that we argue should be required for all prepaid card providers.