More proposed iterations of a prepaid disclosure box are being put forward now that the CFPB has formally expressed an interest in hearing from the public about how they should be designed.
topics. They want to know how they can be designed to be timely, if the disclosure should indicate the provision of FDIC insurance, and if it is important to help consumers to comparison shop.
The Center for Financial Services Innovation released their ideal box in March. Last month, Reinvestment Partners (my organization) released cardSTAR. This month, the Network Branded Prepaid Card Association published their concept.
In general, the CFSI box is distinguished by its brevity. cardSTAR mimics existing disclosure boxes utilized by the EPA for household appliances, covers not just costs but also relevant consumer protections, and includes a QR code to help people get more information at the point-of-sale. The NBPCA box pays attention to third-party costs such a reload fees, to limitations on withdrawals, and asks consumers to verify that they have read disclosures.
At the recent prepaid conference in Maryland, I asked CFSI about their preference for simplicity over explicitness, given that their shorter box necessarily means that many fees will not be disclosed. To paraphrase, the CFSI staffer emphasized that they were concerned that too much information would be difficult for consumers to grasp.
Given their proximity to industry, it was intriguing that the NBPCA box would differ so much from that of CFSI. In general the distinctions are on the "soft" side: while the number of fees listed in generally brief, the NBPCA box does seem to want to lead consumers toward accessing more information online.
A leading civil rights group has focused on the need to express costs rather than fees. Looking at costs is a way to address the need for simplicity. It ultimately means that a disclosure attempts to estimate not just how each fee is priced but instead how those individual parts contribute to the full expense experienced by a customer. It can mean trying to incorporate third-party fees like the ATM expenses charged by out-of-network ATM owners. It means incorporating the known costs of partner reload network into the estimate. To work, though, the method has to address the significantly different use patterns among different clusters of card holders.
In the end, I think that estimates of costs are closer to what the CFPB is imagining when they ask for how people might best comparison shop for a card.