February 22, 2022
The CFPB took action this week to halt prepaid card providers from illegally taking money away from Americans who receive government benefits.
In a compliance bulletin issued on Tuesday, we outlined protections against prepaid cards being used as the only method for distributing government benefits. Companies that act as gatekeepers for government benefits can often abuse that power to extract unavoidable fees, which harm families who need every dollar to make ends meet.
The bulletin confirmed that companies violate the law when people are not provided a choice on where they want to receive their payments, and government contractors that illegally harvest fees through prepaid debit cards will be subject to enforcement actions.