CFSI Proposes a Model Fee Disclosure Box for Prepaid Cards
Calls on industry and regulators to improve fee disclosures to benefit millions of consumers
Las Vegas, NV (March 13, 2012)-Today, the Center for Financial Services Innovation (CFSI) is proposing a standardized fee box for improving the transparency of general purpose reloadable (GPR) prepaid cards. A clear and effective fee disclosure box is an essential part of a high-quality prepaid product and bolsters prepaid as a valuable financial access tool. Three prepaid card providers - Green Dot, Plastyc, and Ready Credit - have committed to adopt or test CFSI's proposed disclosure box. CFSI also calls on regulators to improve disclosures and other consumer protections for prepaid cards.
Most major prepaid card companies voluntarily disclose their fees in a list or box format. However, practices can vary widely and existing disclosures are not always easy to understand. "Consumers need to be able to easily determine the true cost of a prepaid card and compare different products before deciding which to purchase," said David Newville, CFSI's Policy Manager. "A well-designed fee box can help them make informed choices. By developing a simplified and standardized format, companies will ultimately attract more consumers to prepaid cards."
Green Dot (www.greendot.com), one of the largest prepaid companies with cards distributed at retail locations throughout the country, has been working on a new fee disclosure box in consultation with CFSI. It plans to introduce a new box on its card package this fall that is aligned with the key principles underlying CFSI's proposals. "Green Dot has always been an advocate of clear, on-package fee disclosures and we are pleased to partner with the CFSI and fully support its effort to standardize the prepaid industry's practices," said Steve Streit, CEO of Green Dot. "Consumers should not have to worry about surprise fees hidden deep within cardholder agreements and we believe a model fee disclosure box, consistent across all products in the prepaid category, will have long-term benefits for the industry and its customers."
Plastyc (www.plastyc.com), an online prepaid card company, has agreed to develop a fee disclosure box modeled after CFSI's recommendations. "We are excited to incorporate this fee box into our prepaid offerings as a way for consumers to better understand and compare prepaid fees, and as a way of building customer loyalty," said Patrice Peyret, CEO of Plastyc. "By making fees more understandable and transparent, we hope to help consumers trust our products and build allegiance to our brand and services."
Further research is needed to test the fee box with consumers. Ready Credit Corporation (www.myreadycard.com), a national prepaid and bill pay services company, has agreed to evaluate the effectiveness of a model fee box later this year. CFSI also calls on the Consumer Financial Protection Bureau to do consumer testing of prepaid disclosures.
To see a copy of the proposed box and fee disclosure paper, or to read more about CFSI's recommendations for prepaid cards and consumer protections, visit the CFSI website at http://cfsinnovation.com/content/improving-consumer-outcomes-through-prepaid-cards.
The Center for Financial Services Innovation (CFSI) is the nation's leading authority on financial services for underserved consumers. Through insights gained by producing original research; promoting cross sector collaboration; advising organizations and companies by offering specialized consulting services; shaping public policy; and investing in nonprofit organizations and start-ups, CFSI delivers a deeply interconnected suite of services benefiting underserved consumers. Since 2004, CFSI has worked with leaders and innovators in the business, government and nonprofit sectors to transform the financial services landscape. CFSI is a strategic partner of Core Innovation Capital, which is an investor in Plastyc. For more on CFSI, go to www.cfsinnovation.com.
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