According to industry estimates, prepaid transactions jumped from under $5 billion annually to over $39 billion since 2003. Prepaid, loadable credit, debit and gift cards missed the regulatory scrutiny of the Obama administration’s effort to reign in questionable lending practices. However, consumer advocates want to change all of that and are asking the Federal Reserve to take a look at prepaid card guidelines.

Prepaid, loadable cards, unlike credit cards, are not covered by federal laws that protect cardholders from fraud or limit losses when a card has been lost or stolen. Some companies volunarily provide the services but are not under any obligation to do so. They are, however, covered by zero liability and other protections against fraud, if the card is part of the Visa or MasterCard systems. Without the ability to reject unauthorized charges, cardholders are less willing to pay bills or make purchases online with a prepaid credit card.

For consumers without Internet access or who don’t speak English, monitoring account activity can be difficult, as prepaid cards generally don’t send out statements by mail, according to a Consumers Union statement submitted to the Fed’s advisory council. “How can you know if you’ve been a victim of identity theft if you’re not seeing what’s going onto your card?” asked Lauren Saunders, managing attorney at the National Consumer Law Center.

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