Q: Beginning on July 21, 2012, if an ATM fee or an overdraft fee is charged inadvertently to a cardholder of one card in a prepaid card program, will all cards in that program lose their exemption?
A: Not necessarily. Section 235.5(d) provides that, beginning July 21, 2012, debit card transactions initiated using a general-use prepaid card that otherwise qualifies for the exemption under § 235.5(b) and (c) from the interchange fee standards will no longer be exempt if certain fees may be charged to a cardholder with respect to the debit card used to initiate the transaction. Accordingly, if an issuer develops and implements a policy reasonably designed to prevent charging to cardholders the fees prohibited under § 235.5(d) and implements that policy using procedures reasonably designed to ensure compliance, neither the card for which the fee was charged nor the other cards in the program will lose their exemption from the fee standards merely because an issuer inadvertently charged a prohibited fee to a cardholder. (Revised November 2, 2016)
This Q&A was obtained from FRB’s website, in a section for Regulation II (Debit Card Interchange Fees and Routing) Frequently Asked Questions, which may be found here: