“These safer products do not even have to be checking accounts as we typically know them,” CFPB Director Richard Cordray will say, according to prepared remarks. “Many general purpose re-loadable prepaid cards are specifically designed to help consumers manage their spending while limiting their transactional costs and risks."
Cordray, who will speak at a field hearing in Louisville, Ky., said CFPB is planning to finalize a rule this spring to give prepaid card consumers similar error correction and dispute resolution rights that come with checking accounts.
The bureau estimates nearly 10 million American households have no checking or savings accounts due in part to the increased emphasis banks have put on screening new applicants for potential risks.
“At the Consumer Bureau, we believe that people who want the benefits and convenience of some kind of deposit account deserve a fair opportunity to have one,” Cordray said. “We are concerned that some people are being inappropriately sidelined by two things. The first is the lack of account options that fit their financial needs and situations. The second is inaccurate information used to screen some potential customers.”
CFPB also plans to issue a bulletin Wednesday warning banks and credit unions of their legal obligation to ensure the information about negative account histories they pass on to consumer reporting agencies is correct.
In the meantime, the bureau recommends consumers shop around for low-risk accounts that do not carry overdraft fees; that they request copies of consumer reports when denied an account; and that they file disputes with checking account reporting companies that they believe have is incorrect information.