LAWS concerning svcs.pdfVIP

Name /thl_tbl621_3058006/hughes/Mp_1 12/27/2006 06:10PM Plate # 0 pg 1 # 1 1 Developments in the Law Concerning Stored Value and Other Prepaid Payment Products By Sarah Jane Hughes, Stephen T. Middlebrook, and Broox W. Peterson* INTRODUCTION Stored value cards, known in the industry as “prepaid” products, are the most recent big success in the payments industry. The payments industry, the media, legislatures and regulators have taken notice of this success. The most familiar prepaid card products are transportation and telephone cards, which this article does not discuss, and gift cards. Among the more recent additions to prepaid card products is the payroll card. Use of both gift cards and payroll cards has been expanding rapidly. Gift cards essentially are “gift certificates” with magnetic strips. They may be issued for use at one merchant, such as those issued by national retailers of books, coffee, and groceries, or for use at a wider variety of merchants, such as cards carrying the Visa and MasterCard logos. Payroll cards can substitute * Members of the Working Group on Electronic Payments, ABA Cyberspace Law Committee. The Working Group would like to thank the Indiana University School of Law-Bloomington and the law firm of Bryan Cave LLP for research support, and also Katherine Blythe Tower and Katherine Jay, members of the Indiana University School of Law Class of 2006, for their particular work on this project. Stephen T. Middlebrook is Senior Counsel, U.S. Department of the Treasury; he is the co-chair of the Working Group on Electronic Payments, ABA Cyberspace Law Committee (2006–present). He is responsible for Part I of this article, titled “Recent Developments in the Federal Regulation of Stored Value.” Research for Part I is current through June 8, 2006. The views expressed in Part I of this article are the author’s own and do not necessarily reflect the views of the U.S. Department of the Treasury. Sarah Jane Hughes is the University Scho