Prepaid Cards Gain New Protections

There’s good news for users of ­“prepaid” debit cards. Until recently, if you used a prepaid debit card such as the popular Green Dot card or Walmart MoneyCard, you were more vulnerable to loss in the event of errors, fraud or theft than if you used a traditional debit card. But the Consumer Financial Protection Bureau (CFPB) has closed that gap, requiring that providers of these reloadable cards include guarantees of basic protections similar to those provided for traditional debit cards.

Unlike with traditional debit cards, which draw cash from your bank account when you pay for something, you “load” the prepaid cards with specific amounts of money in advance and then keep ­reloading them. The cards carry a Visa, Mastercard or American Express logo.

The new protections also apply to person-to-person payment services such as Venmo, PayPal and Google Pay if they are supported by a prepaid debit card…employer-issued payroll cards…and government-benefit cards carrying Social Security and veterans’ benefits.

Among the new protections: If you report the loss or theft of your prepaid card before unauthorized charges are made, you’re not held responsible and your account will be reimbursed for any losses. If you notify the issuer within two business days of noticing an unauthorized charge, you’re responsible for up to $50…within 60 days, up to $500…after 60 days, all charges. Also, if you inform your card provider about an error with your card, such as the wrong amount being taken out, the provider must confirm or deny the error within 10 business days.

Important: These rules apply only if you register your card with the card provider, which typically means providing information such as your legal name, address, birth date and Social Security number when you sign up. ­