Posted on 06/27/2014 9:48:44 PM PDT by jeannineinsd
Will FDIC Regulations Shut Down the Prepaid Card Industry?
We have written about prepaid debit cards several times in recent months, but this week we saw the latest news that could throw a monkey wrench in the burgeoning prepaid card industry.
As reported by PaymentsSource, Bancorp Inc., one of the biggest issuers of prepaid cards with $4.7 billion in assets, saw its shares drop 30 percent when the company agreed to curtail its prepaid card activity as part of a deal with the Federal Deposit Insurance Corporation (FDIC).
A 22-page consent order mandates that Bancorp institute a number of changes to its lending practices in order to discourage money-laundering. One of the biggest changes was curtailing its prepaid card business. In response to the consent order, Bancorp Bank agreed not to issue any new general-purpose prepaid cards, or establish any new prepaid card distribution channels until the FDIC has had a chance to review its compliance plans.
A day after the report of Bancorp cutting back on its prepaid card operations, the New York Times reported that Bancorp will discontinue Suze Ormans Approved prepaid debit card effective July 1. Bancorp has requested that all Approved card holders either use up any funds left on their cards before July, or the bank will issue checks to cardholders with refunds for their remaining card balance after July 1.
Various celebrities and others have started issuing prepaid debit cards under their own name but backed by major financial institutions such as Bancorp. Suze Ormans Approved card has been one of the less expensive cards with fees of $3 per month, and the Times reports that the fees may not have been enough to offset costs. Other celebrity endorsed cards have been discontinued after complaints about misleading marketing practices, exorbitant usage fees, or having to pay advanced fees.
Other companies like American Express continue to look for new ways to service the underbanked. Orman was especially proud of the fact that her prepaid card would help people build their credit history. Where the credit bureaus dont typically track prepaid card usage, The Times article noted that TransUnion had agreed to start tracking Approved card users activity for credit purposes.
Whether or not the discontinuation of the Approved card is the direct result of the FDIC mandate to Bancorp is unclear. However, since Bancorp is one of the largest prepaid card underwriters, the fact that they have to curtail their prepaid card activity pending FDIC review is a big setback for the prepaid card industry. If Suze Orman is the first against the wall when the prepaid card rebellion comes, who knows how many other prepaid cards will fail in the months to come.
So what do you think? Is this an anomaly or does this sound the death knell for third-party prepaid debit cards? What safeguards are financial institutions going to have to implement to satisfy the FDIC to issue their own cards? Is the effort worth it?
I knew what you are getting at, if it worries you so much write a check instead.
I will use my Chase.
Just pointing it out.
I read someplace that tin-foil hats will keep the overhead helicopters and drones from reading your thoughts with their gamma rays too.
You can never be too safe.
I bought a new front door for $2000 and paid cash.
When they passed the Patriot Act a lib came into the local deli where we gather for coffee and got a cup to go. He was going off on Bush over the library cards. I politely listened and then watched him pay for his cup of coffee with his debit card. I just shook my head, smiling.
I would have put it on my chase and they would give me back $20 or $40 for using it, and if the door was put in broken chase would have told them to go to hell for the money till I get a good one from them. .
.
I don't give a crap if the NSA knows that I bought a new front door.
Do you care the it’s knows?
The IRS
stupid phone
I’m not taking about doors.
I’m talking about a government who’s VA medical system uses whatever excuse to rid its rolls of patients
They’re not going to give a crap about a door I’m talking about not being able to purchase a bag of m & m s without their breathing down your neck about wasting other people’s obamacare investment in you
I’m talking about not needing to talk to des about life choices because they’ll have all the data from the govt
The VA now gets all of its patients’ income data from the IRS Anyone who thinks they’re incompetent is mistaken they know how to get what they want to get
Just keep the balance low and transfer money from your main checking account as needed.
Reactionary, unthinking bush hatred. Look where it gets us
A new report from Bloomberg details how hospitals are using our habits such as buying cigarettes or skipping the gym to create patient profiles in order to identify those who are most likely to get sick.
http://www.freerepublic.com/focus/news/3172772/posts?page=20
It’s from yesterday, was on cavuto then the five then FR as above
Oh this is a quote from cavuto’s piece:
‘A new report from Bloomberg details how hospitals are using our habits such as buying cigarettes or skipping the gym to create patient profiles in order to identify those who are most likely to get sick.’
Tin foil- right
I was just sort of thinking people were keeping up
From yesterday’s item:
‘Fox News (Cavuto) had on a surgeon, who even suggested it will end up they will use that in decisions on rationing the healthcare, to the extent to withhold it from patients who aren’t compliant. He expressed it slightly differently, but this was the meaning.
The original article was published by Bloomberg, here is the link:
Your Doctor Knows You’re Killing Yourself. The Data Brokers Told Her
They are calling it “proactive care management” — just wait until they will ration what you can buy, “for your own good”, of course and naturally not giving you proper care, because it’s all your fault and you don’t deserve it.
Smokers, people with diabetes beware, but not to fear, they wouldn’t dare to use that on homosexual people who naturally have a much larger probability to get AIDS. ‘
The debit links directly so I think one’s entire account can be torpedoed if the pin is discovered. on a pre-paid, you’re only sunk for the amount remaining on that prepaid.
Wells Fargo encourages you to do that already. They open a separate account that you must move money into from your primary account, so your main account is never at risk.
Money laundering is a problem with these cards to be honest, it is the fastest and easiest way for a drug dealer to turn undeclared cash into electronic cash without a paper trail.
Talking with a friend what they REALLY want to go after is the prepaid cell phone minute cards and off the shelf phones that are unregistered. (burn phones) Bought with a prepaid credit card they are completely untraceable unless they can get video of the transaction, and even then it is usually a kid sent to buy them. You can get a cheap one now for about $5, plus a minute card that costs $.10/ minute, $.05/ text. For this chump change they have virtually unlimited use, and Big Brother doesn’t like that much these days.
Sounds to me like they’re going to drive people to electronic currencies such as bitcoin. Essentially no transaction fees.
Insurance companies are diffidently after that data from the press account I've read. If they are going to insure your life, they are going to try and find out about as much of your life as possible. I'll just leave it at that...
I don't think that's an outlandish assumption at all.
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