Both criminals and consumers in credit card debt rely on prepaid cards
Prepaid cards are not only the latest fad for consumers who want to avoid signing up for bank accounts, but for criminals as well. As the Baltimore City Paper reports, federal agents recently raided the home of a suspected gang member and located 12 Green Dot cards. These cards, which work like credit or debit cards, were registered under the names of inmates and gang members.
The City Paper reports that in a letter U.S. senators Joseph Lieberman and Susan Collins wrote to Treasury Secretary Timothy Geithner, they stated, “We have learned that law enforcement agencies throughout our government have become increasingly concerned that stored value devices are being exploited by the [drug] cartels and other smuggling networks to launder their proceeds.”
There has been little legislation instituted to regulate the use of prepaid cards across the United States. Millions of Americans rely on prepaid cards because they cannot be approved for credit or have difficulty managing bank accounts.
Consumers can improve their credit scores and history by taking the time to manage their finances. Paying off debt in a timely manner can help consumers qualify for credit and avoid relying on prepaid cards.