Some Californians’ Prepaid Cards Getting New Legal Protections


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

By Consumers Union on Monday, August 4th, 2014

Is it a sign of good things to come from the CFPB?

Some California consumers receiving child support deposited to prepaid cards are getting new protections thanks to a bill recently signed by California Governor Jerry Brown.

For some consumers, a California state agency collects child support then directs it to the recipient’s account. AB 2252 makes sure that if those funds are deposited to a prepaid card, they are protected to the same extent as funds deposited to a debit card linked to a bank account. And AB 2252 also prohibits overdraft fees, which can siphon away much-needed cash from folks least able to afford to lose it.

California’s new law is great for consumers because it gives consumers some protections that they might not otherwise have. That’s because unlike debit cards, general purpose reloadable prepaid cards have no federally-mandated consumer protections. We think every way to pay should be safe, and applaud California for taking the initiative to protect consumers.

The Consumer Financial Protection Bureau (CFPB) is expected to issue proposed rules for prepaid cards in the coming months. We hope the CFPB heeds California’s example and extends protections to prepaid cards while expressly prohibiting overdraft fees.

Looking for a prepaid card? Check out our prepaid card ratings.

Have a prepaid card? Here are some tips for using it safely.

Used a prepaid card? We’d love to hear from you. Please share your prepaid card story here.


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