Standing up to the big Wall Street banks and predatory lenders has certainly not gotten any easier in the Trump era. In fact, the president and congressional Republicans are eager to roll back many of the post-crisis policies to tame the financial system.
But Amanda Jackson, who takes on powerful financial industry forces every day as the Organizing Manager for Americans for Financial Reform, says she’s drawing strength and inspiration from a surge of activism.
“Trump is forcing people to be more conscious of problems that certain communities have been facing forever,” Jackson told Inequality.org. “There’s no gray area anymore. Either you turn a blind eye to the problems or you answer the call to action. Fortunately, we’re seeing many people answer that call.”
Jackson is currently mobilizing to defend a regulation to prevent abuse of prepaid debit card users. Unlike regular credit and debit cards tied to bank accounts, these cards have not been covered by legal protections against fraud, hidden fees, and unauthorized charges. To protect these consumers, federal regulators adopted new safeguards on prepaid cards last year that are scheduled to go into force in April 2018. But congressional Republicans have introduced legislation to block them.
The problems with the unregulated approach to prepaid cards blew up in 2015, when a business co-owned by Russell Simmons turned into a consumer nightmare. The hip hop mogul had become part of the vanguard of this industry when he created the RushCard about 15 years ago. Business expanded rapidly as Simmons marketed the prepaid plastic to African-Americans as a means of financial control and convenience.
Then in 2015, tens of thousands of RushCard holders lost control of their finances. A technical “glitch” blocked service for as long as several weeks, leaving customers unable to get their direct deposits, make purchases, or pay bills.
Nearly 14 percent of black households use prepaid debit cards, compared to only 9 percent of whites.
The company would eventually agree to pay up to $28.75 million to settle a federal class-action lawsuit, plus an additional $10 million in restitution to customers harmed by the lockdown. But these payouts won’t make up for the immediate hardship suffered by RushCard holders who were already on the financial edge when they lost access to their money. Simmons walked away from the mess in February 2017 by selling out to a competitor, Green Dot, for $147 million.
“The RushCard fiasco really opened people’s eyes to the need for regulation and accountability,” Jackson explained. The Federal Deposit Insurance Corporation conducted a survey in 2015 which revealed that prepaid card use was higher among groups more likely to face discrimination and economic disadvantages, including low-income, less-educated, younger, and black households, as well as disabled people of working age. Nearly 14 percent of black households use prepaid debit cards, compared to only 9 percent of whites.
A Pew Charitable Trusts report estimated that a typical prepaid card user gets hit with $10 to $30 in fees each month, and overdraft charges can run much higher.
“Recently I talked to a Virginia pastor who’d just given some money to a student slammed by overdraft fees on a prepaid card,” Jackson said. “The problem is so common in his congregation he’s had to put a two-time limit on such help per person.”
Many companies have embraced the new CFPB safeguards as a way to legitimize a service that has developed a shady reputation. But one, NetSpend, which sells prepaid cards through payday lenders and check cashers and is known for high overdraft fees, has mounted a strong opposition campaign. The National Consumer Law Center has pointed out that the leading senate opponent of the safeguards, Republican David Perdue, is from Georgia, where NetSpend’s parent company happens to be headquartered.
Congress could vote to block the new safeguards for prepaid card users within weeks.
Jackson and others in the Americans for Financial Reform coalition are working to mobilize civil rights, consumer, labor, small business, investor, faith-based, and community groups to defend the prepaid card rules during the current congressional recess, which runs until April 21. A vote for repeal could come shortly thereafter. Key opponents “will definitely be hearing from us,” Jackson said, “whether through letters to the editor, social media, lobby visits, or direct action.” The coalition is also coordinating an organization sign-on letter.
All of this activity on prepaid cards is a prelude to a bigger fight over the very future of the CFPB, which was created in response to the 2008 financial crisis. Republicans are pushing proposals that would cripple this new agency’s ability to function as an effective watchdog by politicizing its leadership and eliminating its independent funding.
“It’s not fun to have to fight so hard to defend what you’ve already won,” Jackson said. “But people in the Trump era are motivated. Everyone just wants to do more.”