Fed: Consumer Rules Shouldn't Be Imposed on Stored-Value Cards
Seiberg, Jaret, American Banker
Even partial application of consumer protection rules to stored-value cards could impede development of this new payment system, according to a Federal Reserve Board report.
The study, sent to Congress late Monday, recommends using policy statements and public education campaigns to protect consumers without stalling growth of these cards.
"For providers of electronic stored-valued products, a policy statement or education program could offer solutions that are less costly, less burdensome, and more flexible than mandatory rules to address some concerns about consumer rights, liabilities, and responsibilities when using these products," the Fed said.
Separately, the Fed also sent a study on consumer privacy issues to Capitol Hill. The report concluded the use of personal data about consumers to obtain fraudulent credit cards does not pose a safety-and-soundness threat to banks.
"That is a tremendous acknowledgment," said Marsha Z. Sullivan, vice president of government relations at the Consumer Bankers Association. "They didn't say there is a big problem or that Congress ought to legislate."
Lawmakers requested both studies in the 1996 law capitalizing the thrift insurance fund.
The stored-value report evaluates the effect of either applying all, some, or none of Regulation E's consumer protections to stored-value products.
Applying all of Regulation E's protections would be unworkable, the Fed said. Vending machines, parking meters, and other likely receptacles for stored- value cards are incapable of providing customers with receipts. …