Earlier this month the CFPB again highlighted prepaid card products in its Monthly Snapshot. In December 2015, the product spotlight was money transfers, but the CFPB also noted a doubling in prepaid complaints as compared to the same period a year before. Perhaps this is why the CFPB’s complaint snapshot released on March 1 spotlights prepaid products.
Although the Report, which covers a three-month average of complaints from November to January, shows what the CFPB refers to as a “spike” in prepaid card complaints, the actual numbers indicate that the increase has limited significance overall. Granted, comparing complaints from November 2015 to January 2016 to the same period the previous year they are up 62 percent, from 147 to 238. However, as noted in connection with the increase in prepaid card complaints covered in the November 2015 Report, they coincide with a prepaid card company’s widely reported system failure in October 2015. The CFPB also notes in the latest report that, from September to November 2015, that same company accounted for the vast majority of prepaid card complaints, 241. The next six top complained-about companies for prepaid during the same period had a combined total of 68 complaints. Together, these seven companies accounted for 95 percent of all prepaid card complaints for the period. Further, the top company complained about from September to November 2015 had no complaints during the same period the previous year.
The CFPB further reported that, of the 21, 805 complaints received in January 2016, just 1.1 percent related to prepaid products, for a total of 229 complaints. As of February 1, the CFPB has handled approximately 811,700 complaints for all products. Only 0.5 percent of those, or 4,300 complaints, involved prepaid.
The spotlight also provided the percentage breakdown of prepaid card complaints by type. The top two areas were opening, managing or closing an account at 33 percent, and unauthorized transactions and other transaction issues at 29 percent. Complaints regarding fraud or scams were not far behind at 21 percent. The remaining 17 percent of complaints covered the following:
- Fees: 7 percent
- Adding Money: 6 percent
- Advertising and Marketing: 3 percent
- Overdraft, savings or rewards features: 1 percent
Interestingly enough, the CFPB also used the March Monthly Snapshot on prepaid to note its November 2014 Proposal to regulate most prepaid products. The last official timetable for the Final Rule release, in the Fall 2015 Unified Agenda, stated March 2016 as the anticipated date. However, the press release in connection with the latest Monthly Snapshot states only that “Final rules on prepaid products are expected to be published in 2016.” We will soon find out if this means the Final Rule release will be delayed beyond the next month or two. In other words, there may be more waiting to see how the CFPB decides to regulate the majority of prepaid cards.