Consumers pay tens of millions of dollars a year in overdraft charges on prepaid cards - with most of that money apparently going to one Georgia company.
Sen. David Perdue and Rep. Tom Graves are leading the push to block the rule before it takes effect. Identical resolutions they have sponsored to disapprove the rule were introduced in both chambers last week, seeking to put reversal of the rule on the fast track.
The main beneficiary could be NetSpend, whose parent company is Georgia-based Total System Services. NetSpend is said to be the only major prepaid card provider that uses overdraft fees. It said the rule could cost it 10 to 12 percent of its annual revenues - $80 million to $85 million a year, American Banker reported.
If the rule takes effect, companies would be required to disclose up front the various fees of prepaid cards, which many people use instead of checking accounts. The rule also would limit overdraft fees, require financial institutions to investigate and resolve errors, give consumers easy access to account information and limit consumer losses when cards are stolen or lost, according to the Consumer Financial Protection Bureau, which adopted the rule.
But critics said the rule, which is hundreds of pages long, is overly burdensome and may "eliminate important options for financial products for millions of Americans,” according to the Electronic Transactions Association.
In a news release, Perdue said the rule could cripple the electronic payment market.
The rule, which is scheduled to take effect Oct. 1 if it isn't blocked, covers payroll card accounts, government benefit accounts and other prepaid accounts. Georgia in 2015 allowed use of payroll cards to pay employees. But Georgia employees can opt-out of being paid through the cards.
Click here to read more about the procedure that fast-tracks disapproval of regulations: http://politics.blog.ajc.com/2017/01/30/republicans-plan-to-kill-obama-regulations-the-newt-gingrich-way/