Prepaid Cards and Your Privacy

Prepaid cards, also known as “general purpose reloadable cards”, have become increasingly popular in the past few years, among both consumers with and without a bank account. According to a recent report by The Pew Charitable Trusts, approximately 1 in 11 consumers use a prepaid card at least once per month, and 27% of these users do not have a checking account.

Since prepaid cards look and function much like bank cards, many Americans may see them as a simple alternative with less obligation. However, prepaid cards can also come with a hefty list of ‘terms and conditions’ governing fees, penalties, and responsibilities the consumer may not even be aware of at the time of purchase. 

5 major privacy and consumer protection concerns regarding prepaid cards:
  1. Issuers of reloadable prepaid cards may require personally identifiable and sensitive information, such as name, address, phone number, date of birth, and Social Security number.
    TIP
    : People often use prepaid cards under the assumption that they are more privacy friendly, but this isn’t necessarily the case.  Research a card before buying to check the issuer’s reputation for privacy and security. Do not assume that they follow the same policies as major banks and credit card issuers.
  2. Prepaid cards are not required to be transparent about their fees and charges.
    TIP
    : If choosing a prepaid card at a store, very carefully read the fine print on the back. If fee information is missing or seems incomplete, consider choosing another card. Some issuers will be more transparent about fees than others.
  3. Fees may be charged for everyday cardholder fraud-prevention and detection activities like checking a balance, obtaining statements, and online banking.
    TIP: Websites like CreditCards.com and NerdWallet.com can help you compare fees for the different prepaid card options available. (No endorsements implied).
  4. Prepaid cards are not required to notify users of changes to terms & conditions.
    TIP: Check the card issuer website regularly for changes to their terms or privacy policy, and be sure to carefully read any emails or texts you get from the issuer.
  5. When a prepaid card is lost or stolen, the cardholder may be fully liable and the funds irreplaceable.
    TIP: Contact your prepaid card issuer in advance to ask about fund replacement policies in case your card is lost or stolen. Also make sure you have the number for card customer service written down or saved elsewhere at all times.
Consumer complaints about prepaid cards can be filed with the Consumer Financial Protection Bureau (CFPB) as well as with PRC in our Online Complaint Center.