U.S. PIRG Consumer Blog: Consumer groups petition FDIC on improving plastic protections-is your money insured?

Last month we and other consumer groups and leading law professors joined a petition drafted by Consumers Union urging that the FDIC strengthen insurance protections for money on various prepaid and stored value cards, including payroll cards, certain tax refund and benefit cards and other cards including gift cards. As Consumers Union pointed out in its blog, "bank accounts and stock brokerage accounts are insured, but wages directly deposited to a prepaid card might not be." From the petition:

The public puts money and confidence in U.S. financial institutions partly because of the safety net of federal deposit insurance. The development of prepaid cards of various types not specifically connected to individual deposit accounts has created uncertainty and gaps in the deposit insurance safety net that must be closed now, as the nation begins to grapple with an anticipated series of bank failures. We are particularly concerned about various forms of prepaid cards, also called stored value cards, that hold the wage payments of individuals and other funds that are important to individuals and families.