Prepaid-Card Users Get Protection Guarantee (but many companies are already doing this and some will now offer lesser services)

By Yuka Hayashi of The WSJ. Excerpts: 

"The impact of the new regulation will likely be limited for some consumers because large issuers already voluntarily provide the protection the rule requires. Products and services such as Apple Pay that are linked to credit cards or bank accounts, and therefore don’t store value, aren’t subject to the rule. Gift cards also aren’t covered by the CFPB rule.

But employer-issued payroll cards and government benefit cards carrying Social Security and veterans benefits, as well as prepaid wristbands worn by visitors at some theme parks and resorts, do fall under the rule.

The rule has prompted some companies to adjust their product offerings. PayPal notified its personal-account customers they must set up a new linked prepaid account called PayPal Cash or PayPal Cash Plus if they want to keep a balance within their accounts, rather than linking them to a bank or credit-card account.

Total System Services Inc.’s Netspend, a major prepaid-card issuer, terminated an optional overdraft function on its products last month, as the new rule makes it difficult to offer such services.

To receive some of the rule’s benefits, consumers will have to register their accounts with the issuer as soon as they open them."