Photo of Debit Card swipe machine from Rest St...Sen. Richard J. Durbin is on the campaign trail again, but not for his seat in Congress, the legislator has his sights on the abusive practices of the burgeoning prepaid debit card industry which is known for its tendency to charge high fees for everything from activating the prepaid debit card to checking the balance.  Durbin wants to put a stop to the most abusive fees in the prepaid debit card industry.  But some are trying to stop him. Trish Wexler, a spokeswoman for the Electronic Payments Coalition, said fees for the prepaid cards are important to the products’ viability.

“You can’t expect to force a business to offer a product at a loss, period,” Wexler wrote in an e-mail on behalf of the coalition, which represents card issuers including Bank of America and J.P. Morgan Chase as well as payment network operators such as Visa and MasterCard. How viable is a product that offers no real value to the consumer?  Wexler says that these prepaid debit cards can’t operate without the fees, that if you got rid of the abusive fees, they would be operating at a loss.  What type of business operates simply from bilking people out of their money while offering nothing different from a regular checking account?

The people who are damaged the most are the poor and those who are unable to get regular checking accounts with banks.  Do we really want to create a two-tier system of debit cards? One where some consumers can enjoy reasonable protection from abusive fees and another where the poor and vulnerable are bilked out of every dollar they earn.  No, we don’t want that.  While it’s okay to charge fees for a service, it is into okay to abuse your customers and charging $2.50 to check a prepaid debit card’s balance or $3.50 to talk to a customer service agent is abusive.

(source: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/24/AR2010122402701.html )

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