Prepaid Card Scams

Prepaid cards look like a normal credit or debit card, but are different in very important ways.  A prepaid card is a card that you use to access money you have loaded onto the card in advance. When you use a credit card, you are borrowing money. Generally, when you use a prepaid card, you are spending money you loaded onto the card in advance.

With most cards, you can spend the money on the card for daily expenses or withdraw cash from an ATM. But, unlike a debit card, a prepaid card is not linked to a bank account. When you use a prepaid card, you are spending money that you have already loaded onto the card.

Right now prepaid cards have fewer consumer protections than debit cards, such as those that apply if the card is lost, stolen, or other unauthorized charges appear. The Consumer Financial Protection Bureau (CFPB) has issued a rule requiring all prepaid cards to offer these protections, but that rule does not go into effect until October 1, 2017.