II 

112TH CONGRESS 

1ST SESSION S. 2030 

To provide protection for consumers who have prepaid cards, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 17, 2011 

Mr. MENENDEZ introduced the following bill; which was read twice and 

referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To provide protection for consumers who have prepaid cards, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Prepaid Card Con5 sumer Protection Act of 2011’’. 

6 SEC. 2. DEFINITIONS. 

7 (a) DEFINITION OF ‘‘ACCOUNT’’.—Section 903 of the 

8 Electronic Fund Transfer Act (15 U.S.C. 1693a) is 

9 amended by striking paragraph (2) and inserting the fol10 lowing: 


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1 ‘‘(2) the term ‘account’— 

2 ‘‘(A) means— 

3 ‘‘(i) a demand deposit, savings de4 posit, or other asset account (other than 

5 an occasional or incidental credit balance 

6 in an open end credit plan, as defined in 

7 section 103(i)), as described in regulations 

8 of the Bureau, established primarily for 

9 personal, family, or household purposes, as 

10 defined by the Bureau, by rule; and 

11 ‘‘(ii) a spending account, as defined in 

12 section 924(a); and 

13 ‘‘(B) does not include an account held by 

14 a financial institution pursuant to a bona fide 

15 trust agreement;’’. 

16 (b) DEFINITION OF ‘‘FINANCIAL INSTITUTION’’.— 

17 Section 903(9) of the Electronic Fund Transfer Act (15 

18 U.S.C. 1693a(9)) is amended by striking ‘‘holds an ac19 count’’ and inserting ‘‘manages, provides, or holds an ac20 count containing funds’’. 

21 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

22 Section 903 of the Electronic Fund Transfer Act (15 

23 U.S.C. 1693a) is amended— 

24 (1) by redesignating paragraph (4) (relating to 

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1 tem), as so designated by section 1084(2)(A) of the 

2 Dodd-Frank Wall Street Reform and Consumer Pro3 tection Act (Public Law 111–203; 124 Stat. 2081), 

4 as paragraph (3); and 

5 (2) in paragraph (3), as so redesignated, by 

6 striking ‘‘term ‘Bureau’ means the Bureau of Gov7 ernors’’ and inserting ‘‘term ‘Board’ means the 

8 Board of Governors’’. 

9 SEC. 3. SPENDING ACCOUNTS. 

10 (a) SPENDING ACCOUNTS.—The Electronic Fund 

11 Transfer Act (15 U.S.C. 1693 et seq.) is amended— 

12 (1) by redesignating section 923 (15 U.S.C. 

13 1693 note), relating to the effective date of the Elec14 tronic Fund Transfer Act, as so designated by sec15 tion 1073 of the Dodd-Frank Wall Street Reform 

16 and Consumer Protection Act (Public Law 111–203; 

17 124 Stat. 2060), as section 925; 

18 (2) by redesignating section 922 (15 U.S.C. 

19 1693r), relating to exemptions for State regulation, 

20 as so designated by section 1073 of the Dodd-Frank 

21 Wall Street Reform and Consumer Protection Act 

22 (Public Law 111–203; 124 Stat. 2060), as section 

23 923; and 

24 (3) by inserting after section 923, as so redesig25 nated, the following: 


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1 ‘‘§ 924. Spending accounts 

2 ‘‘(a) DEFINITION.—For purposes of this section, the 

3 term ‘spending account’— 

4 ‘‘(1) means a deposit account, other than as de5 fined in subparagraph (A)(i) or (B) of section 

6 903(2)— 

7 ‘‘(A) that is established by a consumer or 

8 on behalf of a consumer at an insured deposi9 tory institution (as defined in section 3(c) of 

10 the Federal Deposit Insurance Act (12 U.S.C. 

11 1813(c)); 

12 ‘‘(B) that contains the funds of a con13 sumer; 

14 ‘‘(C) to which payments are to be made by 

15 a consumer, or at the direction of a consumer; 

16 ‘‘(D) to which recurring electronic fund 

17 transfers may be made, at the direction of a 

18 consumer; or 

19 ‘‘(E) from which payments may be made 

20 at the direction of a consumer through the use 

21 of a card, code, or device; 

22 ‘‘(2) includes a deposit account described in 

23 paragraph (1)— 

24 ‘‘(A) that is operated or managed by a fi25 nancial institution, or any other person; and 

26 ‘‘(B) the funds of which are— 


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1 ‘‘(i) pooled with the funds of a person 

2 other than the person who established the 

3 account; or 

4 ‘‘(ii) held in a name other than that 

5 of the person who established the account; 

6 and 

7 ‘‘(3) does not include— 

8 ‘‘(A) a nonreloadable general-use prepaid 

9 card, as defined in section 915(a)(2)(A), in an 

10 amount that does not exceed $250; 

11 ‘‘(B) a general-use prepaid card, as defined 

12 in section 915(a)(2)(A), that is solely associated 

13 with— 

14 ‘‘(i) a health plan to which section 

15 105 of the Internal Revenue Code of 1986 

16 applies; 

17 ‘‘(ii) a qualified transportation fringe, 

18 as defined in section 132(f) of the Internal 

19 Revenue Code of 1986; 

20 ‘‘(iii) a health savings account, as de21 fined in section 223(d) of the Internal Rev22 enue Code of 1986; or 

23 ‘‘(iv) any other healthcare benefit ac24 count, including a healthcare account relat25 ing to Medicare or Medicaid benefits; 


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1 ‘‘(C) a gift certificate, as defined in section 

2 915(a)(2)(B); 

3 ‘‘(D) a store gift card, as defined in sec4 tion 915(a)(2)(C); 

5 ‘‘(E) an electronic promise, plastic card, or 

6 payment code or device described in clause (i), 

7 (v), or (vi) of section 915(a)(2)(D); 

8 ‘‘(F) a nonreloadable card labeled as a gift 

9 card and marketed solely as a gift card; or 

10 ‘‘(G) a nonreloadable loyalty, rebate, or 

11 promotional card. 

12 ‘‘(b) FDIC INSURANCE.— 

13 ‘‘(1) INSURANCE REQUIRED.—Spending ac14 counts shall be structured to provide and maintain 

15 separate deposit insurance coverage for the funds of 

16 each consumer under the applicable regulations of 

17 the Federal Deposit Insurance Corporation. 

18 ‘‘(2) TRANSFER OF FUNDS.—Any person that 

19 receives funds in connection with an electronic fund 

20 transfer to a spending account shall promptly, and 

21 in no event later than 1 business day after the funds 

22 are activated— 

23 ‘‘(A) transfer such funds to an account at 

24 an insured depository institution (as defined in 


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1 section 3(c) of the Federal Deposit Insurance 

2 Act (12 U.S.C. 1813(c))); or 

3 ‘‘(B) credit the spending account an 

4 amount equal to the amount of such funds. 

5 ‘‘(c) ALTERNATIVE TO PERIODIC STATEMENT.— 

6 ‘‘(1) PERIODIC STATEMENT NOT REQUIRED.— 

7 In the case of an electronic fund transfer from a 

8 spending account, a financial institution shall not be 

9 subject to the requirement under section 906(c) to 

10 provide a periodic statement to a consumer, if the fi11 nancial institution provides to the consumer— 

12 ‘‘(A) access to the account balance of the 

13 consumer— 

14 ‘‘(i) through a readily available tele15 phone line; 

16 ‘‘(ii) through the Internet; 

17 ‘‘(iii) at an electronic terminal or 

18 other device that allows the consumer to 

19 make a balance inquiry, by providing bal20 ance information or, routinely or upon re21 quest, on a receipt provided at the elec22 tronic terminal at the time of an electronic 

23 fund transfer; and 

24 ‘‘(iv) through text messaging; 


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1 ‘‘(B) notice of the means by which the con2 sumer may access the account balance of the 

3 consumer, including any telephone number; 

4 ‘‘(C) in response to an oral or written re5 quest of the consumer, a written record of the 

6 account transactions of the consumer during 

7 the 2-year period ending on the date of the re8 quest that includes the information required to 

9 be provided to the consumer under section 

10 906(c); 

11 ‘‘(D) an electronic record, such as a record 

12 available on the Internet, of the account trans13 actions of the consumer during the 2-year pe14 riod ending on the date on which the consumer 

15 accesses the electronic record that includes the 

16 information required to be provided to the con17 sumer under section 906(c); 

18 ‘‘(E) with at least the same frequency as 

19 a written periodic statement that would other20 wise be required under section 906, notification 

21 by email of the availability of an electronic his22 tory or an electronic periodic statement, unless 

23 the consumer has declined to provide an email 

24 address; 


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1 ‘‘(F) the option to receive a written peri2 odic statement, either a one-time paper state3 ment or continuous regular monthly paper 

4 statements with a single request, and clear and 

5 conspicuous notice of such option at the time of 

6 enrollment and on the website of the financial 

7 institution; 

8 ‘‘(G) annual notice of the error resolution 

9 procedure for the spending account, as pre10 scribed in regulations of the Bureau; and 

11 ‘‘(H) any other transaction information 

12 that the financial institution elects to make 

13 available and that the consumer elects to re14 ceive, such as messages or alerts concerning 

15 other balance or transaction information. 

16 ‘‘(2) FEES PROHIBITED.— 

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 subparagraph (B), a financial institution may 

19 not charge a fee for any service provided under 

20 paragraph (1). 

21 ‘‘(B) FEE FOR WRITTEN PERIODIC STATE22 MENT.—A financial institution may charge a 

23 fee of not more than $1 for each written peri24 odic statement provided under paragraph 

25 (1)(A)(vi). 


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1 ‘‘(3) NO ELECTION BY CONSUMER.—If the con2 sumer has not elected to receive written periodic or 

3 annual statements, has not elected to receive another 

4 regular form of transaction information that the Bu5 reau has determined, by rule, to be equivalent to 

6 periodic statements, and has not accessed the ac7 count online in the preceding 12-month period, the 

8 financial institution shall provide an annual notice to 

9 the consumer at least annually of the means by 

10 which the consumer may access transaction informa11 tion and the option to enroll in written periodic or 

12 annual statements. 

13 ‘‘(d) LIMITATIONS ON LIABILITY.—For purposes of 

14 section 909(a), reimbursement need not be made to a con15 sumer for a loss relating to a spending account that a fi16 nancial institution establishes would not have occurred, 

17 but for the failure of the consumer to report any unau18 thorized electronic fund transfer or account error— 

19 ‘‘(1) not later than 60 days after the date on 

20 which account information that includes the unau21 thorized electronic fund transfer or account error is 

22 provided to or accessed by the consumer under sub23 section (c); or 


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1 ‘‘(2) in extenuating circumstances, such as ex2 tended travel or hospitalization, within a longer time 

3 that is reasonable under the circumstances. 

4 ‘‘(e) FEES.— 

5 ‘‘(1) FEES PROHIBITED.—Except as provided 

6 in paragraph (2), a financial institution may not 

7 charge in connection with a spending account— 

8 ‘‘(A) an annual fee; 

9 ‘‘(B) an overdraft fee, including a fee for 

10 shortage or nonsufficient funds, or any other 

11 fee for a transaction processed for amounts ex12 ceeding the account balance; 

13 ‘‘(C) a usage fee for use at the point of 

14 sale; 

15 ‘‘(D) a fee for a declined transaction; 

16 ‘‘(E) a fee for the use of an electronic ter17 minal that is in the network of the issuer; 

18 ‘‘(F) any fee during periods of inactivity or 

19 dormancy, including a periodic fee charged 

20 after more than 6 months of inactivity; 

21 ‘‘(G) a fee for a balance inquiry or access 

22 to transaction information; 

23 ‘‘(H) a fee for an inquiry to customer serv24 ice; 


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1 ‘‘(I) a finance charge or other fee imposed 

2 in connection with an extension of credit; 

3 ‘‘(J) an account closing fee or a fee to ob4 tain the remaining balance in the spending ac5 count; 

6 ‘‘(K) a fee for any activity not described in 

7 paragraph (2); 

8 ‘‘(L) any fee prohibited by applicable State 

9 law; or 

10 ‘‘(M) any fee of any kind that would cause 

11 the balance to become negative. 

12 ‘‘(2) FEES PERMITTED.—A financial institution 

13 may charge in connection with a spending account— 

14 ‘‘(A) a fee for a replacement card— 

15 ‘‘(i) of not more than $5 for the first 

16 replacement card requested by a consumer 

17 during any 12-month period; and 

18 ‘‘(ii) that is in addition to the replace19 ment card described in clause (i); 

20 ‘‘(B) a fee for expedited delivery of a re21 placement card; 

22 ‘‘(C) a periodic fee, not more frequently 

23 than monthly, provided that no periodic fee may 

24 be assessed if there has been no deposit or 


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1 transaction activity in the account during the 

2 preceding 3 months; 

3 ‘‘(D) a reload fee, or any other fee for add4 ing value to the spending account, if the finan5 cial institution provides a reasonable alternate 

6 method for adding value to the spending ac7 count without a fee; 

8 ‘‘(E) a fee for a transfer from the spending 

9 account to another account; 

10 ‘‘(F) a fee for bill payment; 

11 ‘‘(G) a fee for a withdrawal by the con12 sumer from an electronic terminal that is— 

13 ‘‘(i) located outside the United States; 

14 or 

15 ‘‘(ii) not in the network of the finan16 cial institution, including a fee to cover the 

17 costs of any charge to the financial institu18 tion by the owner of the electronic terminal 

19 relating to the use of the electronic ter20 minal by the consumer; 

21 ‘‘(H) a fee for a purchase or a withdrawal 

22 in a foreign currency; and 

23 ‘‘(I) an activation, initiation, or enrollment 

24 fee. 

25 ‘‘(3) DISCLOSURE OF FEE INFORMATION.— 


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1 ‘‘(A) DISCLOSURE REQUIRED.—Each fi2 nancial institution that offers a spending ac3 count shall provide to a consumer— 

4 ‘‘(i) together with any application, 

5 offer, or solicitation for a spending ac6 count— 

7 ‘‘(I) a table of any fees that may 

8 be charged in connection with the 

9 spending account that— 

10 ‘‘(aa) can be easily under11 stood by the consumer; 

12 ‘‘(bb) is clearly and con13 spicuously displayed to the con14 sumer before purchase; and 

15 ‘‘(cc) includes, at a min16 imum, the amount and a descrip17 tion of each fee that may be 

18 charged by the financial institu19 tion under paragraph (2); and 

20 ‘‘(II) an estimate of the average 

21 total monthly cost to a typical con22 sumer for using the spending account, 

23 based on a profile of the typical con24 sumer established by the Bureau; 


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1 ‘‘(ii) on the card or other means of ac2 cess, a toll-free telephone number and 

3 website at which the consumer may access 

4 a clear and conspicuous disclosure of the 

5 fees that may be charged in connection 

6 with the spending account; and 

7 ‘‘(iii) a wallet-sized summary of any 

8 fees that may be charged in connection 

9 with the spending account and a toll-free 

10 telephone number for customer service re11 lating to the spending account. 

12 ‘‘(B) RULES.—Not later than 9 months 

13 after the date of enactment of the Prepaid Card 

14 Consumer Protection Act of 2011, the Bureau 

15 shall establish, by rule, the headings, content, 

16 and format of the fee table, estimate, and wal17 let-sized fee summary required under subpara18 graph (A). 

19 ‘‘(f) CREDIT FEATURES.— 

20 ‘‘(1) IN GENERAL.—No person may offer or 

21 provide a spending account that has a credit feature 

22 or that can be linked to a credit account that is 

23 automatically repaid from the spending account. 

24 ‘‘(2) EXCEPTIONS.—Nothing in this subsection 

25 prohibits— 


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1 ‘‘(A) a consumer from making an elec2 tronic fund transfer from a spending account to 

3 pay a credit account or from setting up 

4 preauthorized electronic fund transfers to pay a 

5 credit account; or 

6 ‘‘(B) a financial institution from offsetting 

7 an inadvertent negative balance in a spending 

8 account against the next deposit to that ac9 count, provided that the consumer is not 

10 charged a fee or finance charge. 

11 ‘‘(g) CLOSURE OF DORMANT ACCOUNTS.—A finan12 cial institution or other person that provides, holds, or 

13 manages a spending account shall close the account and 

14 refund any remaining funds to the consumer— 

15 ‘‘(1) once the account has been inactive for 12 

16 months, or such other period as the Bureau shall es17 tablish, by regulation; and 

18 ‘‘(2) upon request of the consumer to the finan19 cial institution or other person using an easily acces20 sible method of contact, that the account be closed.’’. 

21 (b) STUDY.—The Bureau shall establish an imple22 mentation plan and timeline for a prepaid card research 

23 study to be completed not later than 1 year after the date 

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1 nomic well being of consumers at different income levels 

2 who use spending accounts versus those who use tradi3 tional bank accounts for their primary means of making 

4 financial transactions. 

5 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

6 (1) WRITTEN PERIODIC STATEMENTS.—Section 

7 906(c) of the Electronic Fund Transfer Act (15 

8 U.S.C. 1693d(c)) is amended in the first sentence of 

9 the matter preceding paragraph (1), by striking ‘‘A 

10 financial’’ and inserting ‘‘Except as provided in sec11 tion 924(c), a financial’’. 

12 (2) ERROR RESOLUTION.—Section 908(a) of 

13 the Electronic Fund Transfer Act (15 U.S.C. 

14 1693f(a)) is amended by striking ‘‘or notification 

15 pursuant to section 906(b)’’ and inserting ‘‘, notifi16 cation pursuant to section 906(b), or written or elec17 tronic documentation pursuant to section 924(c)’’. 

18 SEC. 4. EFFECTIVE DATE. 

19 This Act and the amendments made by this Act shall 

20 become effective 9 months after the date of enactment of 

21 this Act. 

Æ 


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