Buying a Prepaid Debit Card? Read that arbitration clause!

Prepaid debit card use has increased drastically over the last decade. In 2016, Forbes projects that 29.2 million cards will be active, indicating an average growth rate of 19.7%. While some prepaid debit cards have no activation fees, monthly fees, or card replacement fee, other cards are less advantageous for consumers. Fees can often be up to $20 for activation, $4 for monthly maintenance, $5 to reload funds, $1 just to make a purchase, and the list goes on.

Often these cards contain mandatory arbitration provisions that take away a cardholder’s right to join a class action suit against this issuer or engage in a class-arbitration. As a result, it can be very expensive, costly, and time-consuming to assert your rights if you have a dispute with a prepaid debit card issuer. Most consumers do not read their cardholder agreements before buying a prepaid debit card, but savvy consumers do. Open the package and read the agreement or go online and look up the cardholder agreement for the card that you are thinking about buying.

While arbitration agreements may not seem like an important part of your purchase, they are. If you do have a dispute, your rights can drastically be affected by the “fine print”. Many consumers only care about arbitration provisions before it is too late.

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