Tomorrow (May 1, 2014), the Prepaid Payment Products Regulations (the "Regulations") will come into force. The Regulations cover prepaid cards and other prepaid payment products ("Products") issued by federally regulated financial institutions, including banks. These Products are preloaded with funds that can be used by the product holder (the "Holder") to purchase goods or withdrawal funds via a payment network such as American Express, MasterCard or Visa.
The Regulations requires federally regulated financial institutions that issue Products to disclose in a manner that is clear, simple and not misleading:
- all fees, associated with the Product, in an information box that appears prominently on the Product's exterior packaging and other information prior to issuance of the Product;
- certain information on the issuance of the Product, including the Product's terms and conditions, the Holder's rights and responsibilities with respect to a lost or stolen Product, a description of how the Holder can verify the balance of the funds loaded on the Product and a description of how the Holder may, in certain circumstances, use funds loaded on the Product towards partial payment of a purchase; and
- information directly on the Product pertinent to continued usage, including the date on which the Product expires (if any), where to access the full terms and conditions of usage and a toll-free number to access the remaining balance.
In addition, the Regulations prohibit:
- the increase of any fee, or imposing a new fee, associated with a Product, unless certain conditions are met;
- expiry dates on Products, unless it is a promotional product;
- maintenance fees for at least one year after activation of the Product (with some exceptions); and
- charging overdraft fees or interest in respect of a Product without the express consent of the Holder.
Full details of the Regulation can be found at the following link.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.