The Dangers of Travel Cards


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, June 23rd, 2010

By Alex Wong

When travelling abroad, be careful when using “prepaid” or “reloadable” travel cards. The cards appear to be debit cards, often with logos from an associated bank, but they are not afforded the same level of consumer protections as regular bank debit or credit cards.

Prepaid travel cards are often touted as substitutes for the more traditional travelers checks. A prepaid travel card works like this: You “pre-load” the card with the amount that you want, and receive a debit-like card to be used at merchants or at ATMs. Common selling points include protecting your personal banking information while traveling abroad, quick replacement services if the card is lost or stolen, and convenient access to your money through ATMs. This sounds great, but there are many loopholes which can leave the cardholder empty-handed!

Often the brand on the card is not affiliated with the bank that provides the card. Prepaid cards, including travel cards, may come with many fees including purchase fees, dormancy fees and fees to replace cards. Additionally, the bank and card networks’ policies regarding fraud and theft ultimately determine the process.

An experienced traveler and consumer painfully discovered first-hand, how things can quickly go wrong (this abbreviated version of Brian’s story doesn’t capture all the details, to read more, click here) This past March, Brian planned a vacation to Egypt. When he tried to buy travelers checks at his local AAA, as he had always done in the past, he was told that they no longer offered travelers checks and that a new TravelCard would provide the same fraud prevention, with added convenience. He bought the Visa TravelMoney Card issued by MetaBank and loaded it with $1400.

Brian used all the necessary precautions when he used the ATM during his travels. He looked for an anti-tampering device on the ATMs he used, made sure to cover the type pad when he typed in his PIN, and was aware of his surroundings. After two failed attempts at an ATM in Cairo, he figured that the machine was out of money, because he knew he had available funds. Brian found another ATM the following day, and this time, while the ATM denied his full requested amount, the machine allowed him to withdraw half of what he had wanted to withdraw. He thought perhaps there was a cap on the amount of money which could be withdrawn. His attempts to withdraw money using his TravelCard after that were all denied.

Brian attempted to contact customer service, and solicited the help of others, but was provided the incorrect number by his AAA office. He was unable to contact customer service until he returned to the states.

When he returned home, he was told that MetaBank’s fraud protection policies did not cover ATM or PIN entered transactions. Despite his detailed documentation of the unauthorized transactions that took place, MetaBank refuses to refund the $567.60 which has been stolen from his account. Unfortunately, Brian’s experience is not the only one, and again illustrates why although prepaid cards may be useful for some consumers, prepaid cardholders should also have the strong protections against fraud and theft.

If you do choose to buy a prepaid travel card, we recommend:

Check what fees apply. Fees vary and may differ based on the transaction. For example, ATM withdrawals domestically and internationally, and transactions with merchants may all carry different fees.

Ask who services the card and what their fraud policy is. Assurances by the vendor selling you the card may have different policies than the bank that provides the financial services.

Make sure it’s right. Even taking the proper precautions, fraud can still happen, so check your balances for accuracy, keep transaction receipts from withdrawals, and make sure to have the correct information in contacting customer service in the event something goes awry.

If you’ve worked with the prepaid travel cards, share your story with us or post a comment below.

Go here to read more about Brian’s experience.

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