Comments on how the CFPB should approach general-purpose-reloadable prepaid debit cards closed on July 23rd. The comments are available for the public to read on the CFPB's web site. It appears that NetSpend customers were aware of the opportunity to comment. At least one referenced an email that she received from NetSpend which brought up the CFPB's request. To save time for my readers, I am going to re-publish the full text of those comments:
- Joette Ortiz: "I just received email the that the CFPD is wanting to regulate prepaid cards and not let them have overdraft. I think that is so unfare since I have had my account I have had no issue on fees nor issue on getting my thing paid for. When I received the option for overdraft that even maid the card more valuable to me and it just gives me peace of mind if even I need it just for a day it is there and with banks it is all about the fees this is so unfair for the people who are working for hard for the money and the banks always take it even if you are short by a few cents. why does anything have to change if nothing is broken what needs to be fixed? It like taken money away from the poor for the rich get richer and the poor get poor when all we want is to get ahead. So unfair what the CFPB wants to do."
- B. Kinney: "Hi I am a faithful Netspend customer since 2008. I enjoy the many benefits that Netspend has to offer. I am pleased with any time alerts as well as the overdraft protection. That is offered once you reach a specific level. It would be an inconvenience if these features where to be abolished. Netspend offers are very much appreciated."
- Steve Brown: "I have had a pre-paid visa card for four years now, and have no complaints with the company Netspend at all. The over-draft protection is optional, with a 48 hr. grace period, plus if you do overdraw the account the charge is only $15.00. Compared to a bank that always charged me $30.00!!!Since I am on a tight budget this really is convenient and a reasonable fee. Also, you can only overdraw the account $85.00.Please leave my personal financial business alone! I can presume this special committee, must be the work of special interest groups such as the "Payday Loan Sharks or the almighty banking industry!!! Thank you S Brow"
- Bernard Burke: "I have a pre-paid card with direct deposit, I find that banking fees are just plain crazy. Banks just rip people off then come up with a law to protect there racketeering, and loan sharking ways. It's legal !! So I went to a pre-paid card not only how they handle the overdraft fees (25 dollars less) but it was easy to transfer funds, see what my balance is and have a text message of my daily balance, even if banks offer the same as for the fees they will not come down off of them. To be honest, banks are becoming a place just for the rich, not for everyday people. I can do just about everything that I would with a big bank, except for the fees of a big bank. with direct deposit, it's there every time. no problems. I firm these types of non-banking institution, can help people with little income and help put people back on track with there finical health. "
- Tamara Fields: "Overdraft protection is very important, also savings account paying interest."
- Leslie Perrizo: "Please don't make any changes to the prepaid visa card program. I use my card for everything from Internet shopping to ATM services to eating out. I have direct deposit which is very helpful for easy access to my money. I love the alerts that I get from my provider so I have up to the minute balances. I don't think I can express what a godsend this is to me. When you can't get a regular checking account this is the next best thing. I don't feel like a second class citizen without a debit card. Have I used overdraft protection? Of course. And instead of the large overdraft fee from a bank, these fees are manageable. And don't put you farther behind as the bank fees do. Please let me keep this little bit of dignity in my life. "
- Shauree Atkins: "I love my prepaid debit card. Please leave it alone. It makes my life so much easier. I don't have to worry about ridiculous bank fees or standing in lines and I know exactly how much is available on my card. I love my overdraft protection it really helps me out. I am a single mom with three kids and it is hard just trying to keep food on the table. My ODP does that for me. NetSpend is one of the best prepaid cards on the market and I would not change it for anything and I hope just for the sake of a few bucks you will not change it either. Thank You."
- Joseph Mangiameli: "I have used my prepaid card for over 4 years now and have enjoyed the benefits it gives me, I have my SSDI check sent directly to the institution (NetSpend Pre-Paid Card) being on a limited income (SSDI) I need to manage my money tightly, this card gives me that ability, plus I enjoy the overdraft protection they have given me, sometimes towards the end of the month I need it to buy food, medication, etc. and I'm just days away from my SSDI check this feature it is a Godsent. I'm sure that my financial well being would not be as well off if I had to stop using this card. Please consider the fact that there are many others like me, depending on this financial tool to make their lives more manageable. Thank You for listening to me."
- Samantha Nichols: "I think it should be left up to the cardholder I get my SSI benefits on my Netspend prepaid visa card and I sometimes use overdraft protection I like that option and use it to me it is a help would be like getting a payday loan only not what you can't afford so leave NetSpend prepaid visa cards alone and up to cardholder thank you."
- Jeffrey Eichler: "i am a disabled veteran and i depend on my card...i have had banks in the past and they never work out...after my divorce i had to get a different bank and couldnt because my ex messed up our old account and all the banks work on the same system...with netspend i have been a member since 1998 and never once had an issue with them...i have direct deposit which is required for my pay, overdraft protection which comes in handy close to the end of the month when my money has run out and i need a little more food to feed me and my kids, life insurance which isnt a lot but its nice to know my kids will get something if anything were to happen to me in my bad health, also i can pay my bills without having to hop a bus and go all over town or buy a ton of stamps and mailing supplies, i also dont have to carry any cash and be afraid to get robbed i have had that done and dont want it again, i also get text alerts which help me know if there is any activity on my account, not to mention the option for a savings account that im able to put a few dollars away each month...if banks were more like the prepaid card people wouldnt be so upset as much...and then there is the fee you are charged every month...at only $7 a month plus the fee you get from the atm i still save a bundle on what i used to pay at a bank...seems the only ones that might not like a prepaid would be a big bank...there are drawbacks like renting a car or moving truck but i can do almost as much on a prepaid as i can a real credit card...as a matter of fact i have one but dont use it because it cost too much and with my disability i need every dollar i could get to support my family...oh yeah and customer support is great especially on netspend...not only can i call and talk to a real person but i can use the online tools...this veteran depends on my card as i cant get a real bank because of my divorce messing up that option but my credit as well..please dont mess with a good thing...have a great day..."
- Shantay Phillips: "My prepaid card makes my life wonderfully easy, especially on the days when our checks are late and we can use the overdraft protection. Overdraft protection is a wonderful feature to have available on a prepaid card. Making decisions about someones personal financial life without hearing the positives Pros of having a prepaid card isn't professional. My prepaid cards give me the option to have real-time alerts on the card, Do you know how wonderful it is to be able to know when someone else is using your card without your permission? it gives us the opportunity as a customer to call NetSpend and cancel the card without having extra charges."
- Windale Bafford: "The prepaid card makes my life easier by offering real-time alerts about your balance (which most banks don't even offer), optional overdraft protection or Savings Accounts that pay you interest. It is a great way to help me eliminate credit cards usage which creates more debt on an individual or family. I have only little debt to go before I am financially free!"
- Angelica Thomas: "My prepaid card is wonderful, convenient and very secure I want to continue to use my card from Netspend it"s the best and I recommend all my family and friends to get one, I don't know what I would do or be without them thanks NetSpend for a secure life and financial planning."
- Katrina McClary: "I love Netspend it allows me to be protected it allows me to save money in a saving acct. When I'm short it allows me to overdraft."
- Rebecca Egley: "There are far too many regulations on debit cards through banks which is the main reason that I primarily use my prepaid card to make payments and other typical transactions. The prepaid card makes my life easier because it's quicker to go to the prepaid store to load and withdraw money, make payments through them. It also is better for me and my family because they don't require a minimum balance as many banks do with regular debit cards and in this economy, living paycheck to paycheck is the only option for us. It is more convenient for us because they offer real-time alerts about my balance unlike many banks, they also offer optional overdraft protection that helps you get through that last day before payday. The best part about this card is that they still offer a savings account that you can move money to an from and have the chance to earn interest on the money you enter into the account. We do not abuse the card and are lower-class people who are trying to find the best way to be able to pay our bills and have easy access to the money that we earn and save. This prepaid card is the option we have chosen to go with for the last 3 years because of the simplicity and ease of using this card compared to other options that are offered at multi-million dollar bank companies. Putting these restrictions on these prepaid cards will simply prevent normal hard-working people from being able to do what is necessary in order to work and provide for their families. "
- William Ravens: "Dear Congress, Keep your hands off our prepaid cards!!! These banks are crooks. I love the convenience of my Netspend card. I have never had a problem with them that they didn't resolve, unlike the banks I've dealt with before. So there again I say Leave the prepaid card industry alone they are doing just fine without you all messing them up Too!!!! Thank you William Ravens"
- Gloria Harrison: "Having my prepaid card has made my life extremely easier; I don't have good credit and having this card has made it easy to pay my bills, keep track of my spending, and having the Overdraft protection services have been very important. Also having a savings account has also been wonderful. I have had my prepaid card for over 5 years and I DON'T WANT ANYTHING TO CHANGE...IT'S MY MONEY AND THEY PROTECT IT WITH NO UNNECESSARY FRILLS!!"
Follow-Up: (September 2019)
The CFPB's final rule for prepaid debit cards went into effect on April 1st, 2019. The rule did not prohibit the use of overdraft on prepaid debit cards. However, the rule did require that card companies apply an underwriting system before they approve an account for an overdraft feature. The rule said that companies should wait at least 30 days to offer the service, and only after they had made an effort to verify income and expenses.
NetSpend shuttered its overdraft program to new applicants in March 2019 and ended the service to existing accounts when the rule went into effect. The company's actions imply that the rule, while not explicitly outlawing overdraft, did burden program managers to the point where costs outweighed profits.
In the last year, researchers have begun to ask if cash flow underwriting can serve as a better predictor of the ability-to-repay a loan. Earlier this week, FinReg Lab published "The Use of Cash-Flow Data in Underwriting Credit: Small Business Spotlight," focusing on results from the use of cash flow in loan underwriting for small businesses. Their conclusion was that cash flow data did a better job. The researchers used data from online business lenders (Kabbage, LendUp, Oportun, and Petal) that specialize in making loans to businesses that do not meet the criteria to receive credit from traditional banks and credit unions. Ultimately, FinReg Lab hedged its bets, concluding that more research using better data was needed before too much could be made of cash flows as a tool for vetting applicants. They also noted that several market and policy issues need to be addressed before cash flow methods can truly go to scale.