"Consumers have a huge number of protections already," says Judie Rinearson, an attorney at Bryan Cave , which represents prepaid card companies. "There are a lot of other areas that probably require more focus than prepaid cards."
But data show that consumers are using retailers, which are less regulated than banks, to obtain prepaid cards. The under-banked are heading to stores such as Walmart and Safeway to shop for prepaid cards 37% of the time, vs. going to banks 27% of the time, Javelin research shows.
Consumer advocates hope federal credit and debit card regulations would be extended to prepaid cards, such as rules that protect consumers from liability on charge errors and stolen cards, and prohibit credit card-type overdraft features.
"A big part of CFPB (getting involved) is creating a level playing field so people have the same rights and protections on prepaid cards as they do on a debit card," says Lauren Saunders, managing attorney with the National Consumer Law Center