The Canadian government announced Wednesday of new rules and regulations for the prepaid credit card industry, which has gone largely unregulated for several years. Consumers will no longer worry about hidden fees and expiry dates.
Finance Minister Jim Flaherty, alongside Lucie Tedesco, Deputy Commissioner of the Financial Consumer Agency of Canada (FCAC), confirmed at a press conference of a set of new measures to protect Canadian consumers when it comes to prepaid credit cards.
A prepaid credit card allows consumers to make purchases or withdrawals from a credit card that has funds already available. These cards have fees, but many industry and consumer groups say they are not completely lucid and the information can be rather confusing.
“Our Government is committed to protecting consumers,” said the finance minister in a press release. “We want to be sure Canadians understand what fees and conditions apply to prepaid products so that they can continue making informed financial decisions in their day-to-day lives. These changes will ensure that Canadians get the full value of their hard earned dollar when using a pre-paid credit card.”
Wednesday’s announcement of the proposed Prepaid Payment Products Regulations would force companies to disclose the fees inside of an information box displayed on the product’s exterior packaging and make the consumer information simple and not misleading.
Also, no fees would be allowed without full disclosure to the consumers. In the first year, dormancy and maintenance fees would be prohibited. Funds would not be permitted to expire if not used.
This would make the transactions transparent. To make sure companies are complying with the new rules and regulations, the Financial Consumer Agency (FCA) will monitor the companies.
“We welcome the Government of Canada’s continuing efforts to protect consumers,” said Laurie Campbell, CEO of Credit Canada Debt Solutions. “Regulations like these are essential safeguards for Canadians who need a little extra information when making important financial decisions.”