Stored Value Cards
FDIC has published yet another proposal on the treatment of stored value cards. The proposal updates the proposal of April 2004. Since that time, there have been important developments in stored value cards, including the increased use of payroll cards. Funds on the cards would be treated as insured deposits. The new proposal would treat as insured the party that places the funds on deposit unless and until there is a change indicating that the depositor is no longer the legal owner of the funds. Insurance would also transfer if the records of the depository institution or the original depositor show the identities of the cardholders and the amount payable. This interpretation would mean that employees being paid through payroll cards would be holding an insured deposit just as they would if the funds were deposited into a checking or savings account. There is a 90-day comment period on the proposal.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 9, 8/05
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