Director Cordray’s speech yesterday to the National Association of State Treasurers consisted primarily of his standard remarks about the CFPB’s handling of consumer complaints, financial education initiatives, and mortgage reforms.  However, he did make some noteworthy comments on prepaid cards offered by states and local governments for wages and other government payments. 

Noting that federal law requires employees to have a choice of how to receive their wages, he observed that “it is critical for consumers to have a choice of how to receive government payments as well.”  He stated that when considering how to design “a prepaid card program to distribute child support payments or state tax refunds, we think that states should mandate that consumers have the option of direct deposit into a bank account and, if they do choose a prepaid card, it should include the option to easily switch to direct deposit at any time.” 

He also advised states and local governments to “take into consideration how potential card partners intend to treat consumers, rather than settling for a deal that is more attractive only because its terms are more costly for the card users.”  He noted that items to be considered “could include the type and amount of fees, broad access to a robust set of in-network ATMs, and terms that make it easier for card users to access information about their accounts without cost.”