Using a fast-track process enabled by the 1996 Congressional Review Act, congressional Republicans are working to get rid of rules that keep prepaid debit card companies from charging tens of millions of dollars in overdraft fees.
In October, the Consumer Financial Protection Bureau finalized rules that include limitations on those fees. The Electronic Transactions Association, a lobbying group for the payment industry, and Total System Services, a Georgia-based financial company, have pushed hard for its repeal. NetSpend, a unit of Total System Services, is the largest manager of prepaid cards in the United States, BuzzFeed News reports. While most prepaid debit card companies do not charge overdraft fees, NetSpend does, and the company told investors last year that it made about $85 million off of overdraft fees in 2016, or 10-12 percent of its overall revenue. These prepaid debit cards are disproportionately used by low-income consumers.
During the last three months of 2016, Total System Services spent $270,000 lobbying Congress, and since 2010, the company's political action committee has given Sen. David Perdue (R-Ga.), a former CEO of Dollar General, and Sen. Johnny Isakson (R-Ga.) $37,500 in campaign contributions, data from the Center for Responsive Politics shows. Last week, Perdue, who has called the CFPB a "rogue agency," introduced a resolution in Congress to throw out the rules. The Congressional Review Act allows simple majorities in both houses of Congress to eliminate newly finalized regulations with approval from the president, and Democrats won't be able to block it with a filibuster. Furthermore, regulators will not be able to reintroduce a similar rule in the future.
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As of 2014, some 22.4 million people were using prepaid cards. Should this go through, it will be because of "members of Congress that support Wall Street and predatory lenders over working families," Lauren Saunders, associate director of the National Consumer Law Center, told BuzzFeed News. "It is outrageous that Congress may block basic fraud protections on prepaid cards so that NetSpend can keep gouging struggling families with overdraft fees."
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