Magazine article American Banker

Prepaid Execs Urge New Tack in Lobbying Efforts

Magazine article American Banker

Prepaid Execs Urge New Tack in Lobbying Efforts

Article excerpt

Byline: Will Hernandez

ORLANDO, Fla. - Though the prepaid card industry continues to grow, proposed state and federal government regulations pose a threat to the sector, executives at the Prepaid Card Expo said.

Participants in panel discussions on Monday encouraged colleagues to remind politicians about the ways in which prepaid cards benefit consumers, as lawmakers consider legislation that could affect the industry.

Prepaid providers found out during the period leading up to the Credit Card Accountability Responsibility and Disclosure Act's passage in 2009 that politicians were unmoved by the industry's complaints about how regulation would affect business models, said Talbott Roche, senior vice president of Blackhawk Network.

"Talking about the business impact with Washington wasn't going to get the job done," she said. "The first lesson we learned from the front lines was to maintain a consumer-centric posture when we're advocating for our industry."

Roche recalled the challenges the industry faced as the CARD Act took shape. The bill was the first piece of legislation to affect the prepaid industry.

The gift card rules that the Federal Reserve Board finalized last March prohibit dormancy, inactivity and service fees on gift cards unused for at least one year. The rules also state issuers may charge no more than one fee per month after one year.

Other provisions stipulate that the cards cannot expire within five years of being issued and that the expiration terms must be clear and conspicuous. Fee transparency was the most notable new rule, observers said at the time.

The rules were to take effect Aug. 22, but some were postponed after lobbying from theNetwork Branded Prepaid Card Association.

The group argued that more than a 100 million gift cards would have to be scrapped because of requirements for the display of expiration dates, and said that would create a shortage for the holiday season. …

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