New rules on prepaid cards come into effect
Receptionist Erin Gamboa holds her Green Dot prepaid debit card Tuesday June 14, 2011 in Monrovia, Calif. (AP / Damian Dovarganes)
Published Wednesday, April 30, 2014 1:49PM EDT
New regulations on the fees associated with prepaid cards have come into effect in Canada.
Prepaid debit cards, which can be used as an alternative to cash, allow users to make purchases or withdraw money from a pre-set amount that has already been loaded onto the card. Prepaid cards are offered by a number of financial institutions, credit card companies and retailers.
Many of the cards come with several fees and charges, including monthly maintenance fees, activation fees and charges for withdrawing money from an ATM.
Finance Minister Joe Oliver highlighted the new rules for issuers of prepaid cards during a news conference Wednesday afternoon.
- a ban on maintenance fees for the card for at least one year after the card is activated
- a ban on assigning an expiry date to prepaid cards
- a requirement that federally regulated financial institutions disclose a list of all the fees associated with the card in an information box that is printed in a visible location on the card's packaging
- a requirement that all other key information be given to the consumer before the card is issued in a manner that is "clear, simple and not misleading"
Oliver said the introduction of the new regulations is a sign that the government is dedicated to saving Canadians money.
"As part of Canada's Economic Action Plan, our government is committed to protecting consumers and saving Canadians money," he said in a statement issued Wednesday afternoon. "These new regulations show we are taking action to support that commitment, helping to create jobs, growth and prosperity across Canada."
The new regulations apply to all federally regulated institutions, including banks, and the Financial Consumer Agency of Canada (FCAC) will be responsible for enforcing compliance with the new rules.
Financial institutions have said that the regulations will apply to all prepaid cards currently in the market starting Wednesday, regardless of when the cards were purchased, according to a statement from the department of finance.
Lucie Tedesco, FCAC commissioner, said in the statement that the agency welcomes the regulations and will work to make sure financial institutions meet them.
With files from The Canadian Press