By Camille Pendley – Creative Loafing
Earlier this month, U.S. Sens. David Perdue and Johnny Isakson, along with a cadre of other GOP senators, introduced a fast-tracked resolution that would veto a package of rules capping overdraft fees on prepaid debit cards and applying other protections. The rules package would cut into revenues of Georgia-based financial firm Total System Services, which spent $270,000 lobbying against the rules in the last three months of 2016 alone. Total System Services has contributed $37,500 to Perdue’s and Isakson’s campaigns since 2010.
More than 440,000 Georgians use a prepaid card, a commonly suggested tool for people with poor credit to improve their credit score. Most prepaid card companies don’t penalize customers with overdraft fees. But NetSpend, of which Total System Services is the parent company, does use overdraft fees. NetSpend cards target low-income consumers, largely sold at payday loan and check-cashing stores. The company also advertises its prepaid cards for veterans and people who receive other government benefits payments, such as persons with disabilities.
Liz Coyle, executive director of Georgia Watch, urged “Georgia’s senators to side with Georgia veterans, seniors and struggling families and not with a company that takes overdraft fees out of the pockets of these and other Georgians.”
NetSpend expects to lose $80 million to $85 million, or 10 percent-12 percent, of its current revenue from overdraft fees if the rules go into effect.
The rules, issued by the Consumer Financial Protection Bureau, extend the same basic consumer protections that apply to traditional debit cards — protections against fraud, unauthorized charges and limits on overdraft fees. They were issued in October last year and would be effective Oct. 1, 2017, if Perdue and Co.’s resolution fails.
Lauren Saunders of the National Consumer Law Center said in a statement: “Consumers turn to prepaid card to protect themselves from overdraft fees, and prepaid cards should be just that: ‘prepaid.’”
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Source: Creative Loafing