In an article entitled “A Push to Regulate Prepaid Cards,” The Wall Street Journal (on 6/25/09) warned that prepaid reloadable cards—payment cards not tied to a traditional bank account—will not be covered by the new federal law designed to protect against fraud, ID theft, and losses from stolen cards. Also not covered: gift cards, wire transfers, checks, and securities/commodities transfers.
“Though many prepaid card companies do offer some consumer protections,” the article said, “they do so voluntarily.” A member of the federal government’s Consumer Advisory Council cautioned: “Cardholders’ inability to reject unauthorized charges makes it risky for them (to use the cards) to pay bills or make purchases online.”
However, the article continued, almost all prepaid cards are serviced by either Visa or MasterCard, “which offer holders zero liability and other protections against fraud.” But, usually, prepaid card issuers don’t send out monthly statements, so you won’t know if or when you’ve been a victim of fraud, or by whom.
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