Released: June 25, 2009

A push to regulate prepaid cards

Source: Kristina Peterson, Wall Street Journal (Paid Registration)

Credit cards, debit cards and gift cards are due to face tighter regulations in the coming months thanks to a new credit-card law signed by President Barack Obama, but one piece of plastic is flying under the regulatory radar.

Prepaid reloadable cards, payment cards that aren’t tethered to a traditional bank account, won’t get the same regulatory scrutiny under the recently enacted Credit Card Act of 2009.

Consumer advocates want to change that. They are urging the Federal Reserve to strengthen guidelines affecting prepaid cards from companies such as Wal-Mart Stores Inc., Green Dot Corp., NetSpend Corp. and H&R Block Inc. while the Obama administration’s focus remains concentrated on regulating the credit-card and banking industries.

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