The vast majority of prepaid debit cards don’t come with overdraft fees, but NetSpend’s do, and the fees accounted for 10-12% of its overall revenue in 2016, or $80-85 million, the company told investors in October. Its parent has spent big on lobbying and political donations in a bid to kill the rules: in the last three months of 2016 alone, it spent some $270,000 lobbying Congress.
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Because prepaid cards are used disproportionately by low-income consumers — NetSpend provides the prepaid cards sold by four of the country’s five largest payday loan companies — advocacy groups have pushed regulators to pay close attention to the industry, and to eliminate overdraft fees.
The rules also bring other features of traditional banking services to prepaid cards, like protection from unauthorized charges and requirements for clear descriptions of fees. An estimated 22.4 million people were using prepaid cards in 2014.
Lauren Saunders, associate director of the National Consumer Law Center, said reversing the rules will be an example of “members of Congress that support Wall Street and predatory lenders over working families.”
