Payroll cards regulated to protect cardholders

by. Konrad Christensen

Payroll cards offer a healthy alternative for unbanked and underbanked consumers who would otherwise use a cash-based system to manage their finances.

Payroll cards are highly regulated by a myriad of federal regulations, including protection against fraud and lost or stolen funds. Also, employers distributing payroll cards must abide by state wage and labor laws.

Payroll cards are subject to Regulation E, which includes many important consumer protections. For example, if a payroll card is used fraudulently, the cardholder is only liable for up to $50 in fraud losses. Providing further protection, many payroll card issuers have zero-loss policies, meaning cardholders won’t lose even a penny.

Reg. E also requires dispute-resolution procedures through which cardholders can protect their spending. Another requirement, periodic account statements, allow cardholders to track spending through secure electronic access to their statements. Lastly, Reg. E requires full disclosure of all terms, conditions and fees. This gives payroll cardholders a comprehensive understanding of how to use the card to their best advantage.

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