How the CTA can protect consumers

The new Ventra fare card system, set to be rolled out to CTA riders this summer, has left people with a lot of questions about whether the system will be a good deal for Chicagoans.  The CTA will have one of the first transit fare systems in the country to be linked to a prepaid debit card – a largely unregulated product that can make it easy for private banks to gouge consumers with hidden fees and unpredictable charges.  

There’s already a lot of talk about the potential hidden fees some commuters could find themselves paying – like a four dollar fee for uploading money on to the card in person –that’s outrageous!

That’s why Illinois PIRG has sent recommendations to the CTA to make sure that the prepaid debit card attached to the Ventra transit system has the strongest consumer protections possible.   

Before we get to the recommendations, it’s important to get the facts.   The CTA does have to move away from the current Chicago Card – last year the Illinois General Assembly passed legislation requiring the CTA to go to a universal fare-collection system by 2015. Thus, the Ventra system was created.  The system will eventually allow customers to use a single fare card for regional transit throughout the Chicago area, and it will allow riders to use their own credit cards with touchless technology to ride the train.

Even so, consumers who choose to link the Ventra card to a pre-paid debit card should not face outrageous or hidden fees. That’s why we’re making these recommendations:

1. Solicitations about the prepaid debit card should disclose all fees associated with use of the prepaid debit cards as well as its error resolution process

• Rationale – Proper disclosure of the fees on a prepaid card is the bare minimum needed to protect consumers.  By disclosing the fees in solicitations for the product, consumers are given information upfront to determine if a prepaid card is the best option for them.

2. The prepaid debit card should have full Regulation E protection 

• Rationale: Prepaid debit cards should be compliant with the Electronic Funds Transfer Act and Regulation E in advance of potential rulemaking by the Consumer Financial Protection Bureau which would make those regulations applicable to prepaid cards, especially to the extent that they relate to notice in periodic statements and liability for cards that are lost or stolen.  

3. A statement should be provided to every consumer for each monthly cycle in the manner in which the consumer has specified they prefer to be contacted (not just those who ‘opt-in’)

• Rationale – Consumers should have the right to choose the form in which they want to receive information, ensuring that consumers are comfortable monitoring their accounts and actually do so.  

4. There should be no pre-dispute mandatory arbitration on the prepaid card

• Rationale – This practice is particularly disadvantageous and unfair to low-income consumers, a major constituency of these products.  Because most arbitrators’ decisions are final and judicial review is rarely available, companies are able to avoid scrutiny of their practices and determinations of whether they are in compliance with the law.

5. Balance information should be available for free through text messages

• Rationale – Text messaging is the simplest means of obtaining balance information; the consumer does not need to wade through a telephone menu or remember a password, find an ATM, wait in line to use it, or waste time doing so if the account has insufficient funds.

6. 30 days’ notice should be provided before making changes to fees charged or terms and include in that notice a reminder that consumers can cancel the card at any time

• Rationale – Consumers must be made aware when changes that may increase the monthly cost of their card occur. Changes to fees or terms includes increased fees for the consumer, increased liability for the consumer, limiting the types of available electronic funds transfers and imposing stricter limitations on the frequency or dollar amount of transfers.

7. The fee for loading cash at participating reload agent locations should be capped at $2

• Rationale – Consumers should not be charged excessive fees to add money to their account in cash, especially when the cards are intended to benefit individuals who do not have access to traditional means of banking.

8. The ATM withdrawal charge of $1.50 should be reduced to 50 cents and allow for at least four free ATM withdrawals each month

• Rationale – Extracting high fees for ATM withdrawals can add up hundreds of dollars per year, especially when consumers are using ATMs that charge their own fee on top of the $1.50.  

9. Live operator customer service calls should be free

• Rationale – In order to manage their account, consumers should have free access to information regarding their account by whichever means are the most convenient for them.

10. Remove the balance refund cost of $6

• Rationale – If the terms of the prepaid card become undesirable for consumers, they should not be penalized for removing their funds from the prepaid card.

11. Remove the monthly inactivity fee of $2

• Rationale – Consumers should not be penalized for not spending their own money for long periods of time.

12. Remove bank teller withdrawal fee of $2

• Rationale – Consumers should have access to their money by whichever means are the most convenient to them without facing financial penalties.

13. Eliminate cost of monthly paper statement

• Rationale – Not everyone has internet access to view their statement online and all consumers should have access to their account information without facing a financial penalty.

14. Remove $2 fee to transfer money from the Ventra card to a bank account

• Rationale – Consumers should be able to move their money freely from one account to another without facing financial penalty.

15. Include an asset building feature on cards – such as being linked to a savings account

• Rationale – Building up savings is a way to protect consumers from unforeseen expenses and can help unbanked and underbanked populations.

16. Online information about the Ventra prepaid card should be available in multiple languages – English, Spanish, Polish, Chinese, and Arabic

• Rationale – All potential customers should have access to information relevant to making an informed decision about the card.

 
We’re looking forward to working with the CTA to implement these. Let hope they do!