Ottawa to regulate prepaid credit cards
Ottawa is stepping in with new rules for the largely unregulated prepaid credit card market.
Finance Minister Jim Flaherty is announcing Wednesday that in the future, issuers of prepaid cards will not be able to impose expiry dates and must be up front about hidden fees and conditions.
The move is part of the government's expanding code of conduct measures taken to govern credit and debit transactions, that had previously not applied to the relatively new prepaid market.
While still a small segment of the market, prepaid plastic has become an option for consumers without conventional credit or debit cards, young adults, and for parents who want to introduce their children to using credit while limiting the risk of theft and over-spending.
But the sector has also faced criticism for exorbitant hidden fees that reduced their face value and fooled customers. These can include monthly or annual fees, maintenance costs, as well as ATM charges.
The most notorious example occurred two years ago when Hollywood celebrity Kim Kardashian backed away from endorsing a prepaid card bearing her name after a public outcry over the card's usage fees, including a close to $60 activation fee.