Think a prepaid debit card can’t be tracked? Think again. Although, in the eyes of the law, this could be a very good thing. In the eyes of criminals, not such a good thing.
As of right now, though, purchases on these cards (which seem to be picking up steam nationwide) cannot be traced, which is not such a plus if you have terrorists and drug dealers using said cards.
The federal government beckons back to the example set by the 9/11 (a date whose anniversary is looming on most Americans’ minds). If the terrorists had opted to use prepaid cards, they would have not been able to have anything they bought linked back to them. This concern was identified back in 2005 and it remains a problem.
So that begs the question, what’s the government going to do about it and why has it taken so long?
Well, hopefully, action is just about to be taken. Regulators and lawmakers aim to make it harder to get a hand on these prepaid cards: no matter if you’re a terrorist or a babysitter or anything in between.
However, some are sounding the alarm that these proposed regulations could hurt smaller card companies, in the end. Most bigger card companies have prepaid debit options available, such as the MasterCard credit card company or the Visa credit card machine. They are their own unique breeds, though.
A prepaid debit card doesn’t have too much in common with its namesake and one rule intends to change even their very name. At one point they were called “stored value cards” and now they have been termed the “prepaid access cards.” Why? Because of the fact they are not affiliated with a specific bank account. What these cards represent are sums of money you’ve already paid (or been gifted in some cases) in advance.
And where is that money at? Well, just about anywhere, but one thing is for certain- it’s no where the government can go.
According to a professor at Georgetown University, James Angel, in an article with MSNBC, “the distinction actually makes good sense….there’s a problem with a prepaid debit card because it can begin with cash.” Thus, “breaking up the trail.” There’s no ability to track the money, from that point.
However: how real of a threat is it?
Law enforcement agencies, as well as banking regulators, are the first to come out and say that there is no way to tell how much money is being moved, undetected, across American borders via these cards.
The Government Accountability Office internalized the Treasury Department’s 2005 assessment and deemed it a “significant threat to national security.”
The Financial Action Task Force, which is an international agency spawned by the G-7 in 1989, also has found it to be a global plight. And America is the most vulnerable, in the international scheme, as it is the world’s biggest user prepaid debit cards.