Consumers Union Urges Consumer Protections on Payroll Cards
Consumers Union and many other consumer organizations have asked the Federal Reserve Board in a letter to take steps to clarify that payroll card users are entitled to the same kinds of protections that consumers have with bank debit cards under the federal Electronic Funds Transfer Act, including liability limits and error resolution rights.
Companies marketing payroll cards, prepaid debit cards, and other stored value cards sometimes cite the VISA or Mastercard “zero liability” policies as evidence of the safety of these cards for consumers. However, these policies do not provide consumers with the same protections as the federal Electronic Funds Transfer Act.For example, Mastercard’s policy does not apply if there are two or more instances of theft or unauthorized use of a card in one year. VISA’s “zero liability” policy does not apply when the card is used at an ATM. And VISA’s policy does not protect the consumer if the card is used for a PIN-based transaction processed on another network. Of course, a consumer cannot control whether a thief who gets their card and guesses the PIN chooses to use this information at an ATM or a non-VISA network.
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