Beware Of Hidden Or Undisclosed Prepaid Debit Card Fees
According to a recent New York Times article, consumers are purchasing more prepaid debit cards than ever before. Buying a prepaid debit card is as easy as purchasing groceries or other items at your local pharmacy or supermarket. For many consumers who do not have bank accounts or can not get a credit card, prepaid debit cards are the only option available to them, making these cards the banking industry’s fastest-growing products. And because it is a relatively new industry, prepaid debit cards have not undergone the Congressional and regulatory scrutiny of traditional credit and debit cards issued by banks. As such, consumers should be aware that not all prepaid debit cards are the same, and that some charge hidden or undisclosed fees.
For example, the MiCash Prepaid MasterCard charges cardholders a $9.95 activation fee, and then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service. These fees can add up quickly, and dwarf the amount of money placed on the card by a consumer who has purchased a MiCash prepaid card.
Most importantly, many times the fees charged to consumers are buried in the fine print or not disclosed at all. According to the New York Times, Pay-O-Matic Financial Services allegedly does not disclose any of the fees charged to consumers who purchase a Pay-O-Matic prepaid debit card. The article discusses how a consumer in New York started to notice fees accumulating on his prepaid debit card after his paycheck was deposited into the card. It was only after the consumer returned to Pay-O-Matic to complain was he provided with a detailed list of more than two dozen fees.
Moreover, some consumers are paid their salaries with prepaid debit cards if they don’t have a bank account for direct deposit. Wal-Mart, for example, recently said that it would pay employees only on prepaid cards if they did not have a bank account. But Wal-Mart employees who then use these cards may incur fees, and consumer advocates question why there are any fees at all, particularly when the recipients have no choice but to accept their salary by having the money deposited into a prepaid card. As Linda Sherry, director of national priorities for Consumer Action, states, “To me, it’s a terrible thing to give people their pay on a card that has fees on it.”
If you are a consumer who purchased a prepaid debit card, or had your salary deposited by your employer into a prepaid debit card, and have incurred fees as a result of using the card, please contact us to discuss your legal options.