Prepaid card markets and regulation

Abstract

Prepaid cards, also commonly referred to as stored-value cards, are typically credit card-sized pieces of plastic that contain or represent an amount of pre-loaded value. They include a wide range of payment products, such as gift cards, payroll cards, teen cards, and travel cards. Despite significant product innovations, it is unclear whether and how existing federal and state laws that apply to other financial products (e.g., checks, credit cards, deposit accounts) apply to the different varieties of prepaid cards. Overall, the law in this area is very much unsettled. In an effort to understand the legal and regulatory issues facing prepaid cards, the Center invited Judith Rinearson, chief counsel to American Express’ electronic stored-value business, to present a workshop on the topic. This paper provides highlights from Rinearson’s presentation. It analyzes the different kinds of prepaid card products on the market and the federal and state laws that potentially apply to them.Regulation E: Electronic Fund Transfers ; Stored-value cards