If you are shown in red on a prepaid credit card, the card provider may not collect the debt amount. This is apparent from a decision of the Amsterdam court.
Red is not possible with a prepaid card, that is inherent to the product. If it does happen, then it is for the card issuer’s account if he does not sufficiently warn the consumer in advance that this is possible.
You deposit your own money
With a prepaid credit card you cannot borrow or advance money as with a real credit card. You deposit money yourself, usually just from your bank account. The word prepaid is clear enough in that regard.
You can therefore not spend more than what has been put on the map.
Nevertheless, a prepaid card holder was confronted with a negative balance. He is a customer of NA Cardservices. This is a British card issuer that has also had a branch in the Netherlands, but has not issued new cards to private individuals in our country for several years. However, there are still many prepaid NA credit amount, the customer refused to pay. That led to a lawsuit.
Financial consumers are protected
The court has now ruled in favor of the consumer. According to him, NA Cardservices did not sufficiently indicate the risks of the card when concluding the agreement with the customer and the amount of the debt may not be collected.
The small print does state that you have to pay back if you spend too much with the card. But the judge finds that insufficient.
If the publisher advertises with ‘prepaid credit card’, as NA Cardservices has done, the consumer rightly assumes that he does not borrow money. Otherwise he probably would not have taken the product either.
The judge calls the conduct of NA Cardservices “misleading” and “unfair”.
The amount involved has not been taken into account in the court case. It also does not matter whether or not the consumer has consciously spent too much.
How can such a debt arise?
A prepaid credit card is therefore not actually a credit card, but is called so because it works like a credit card. You can pay with Visa or Mastercard in the shop or on the internet, depending on the logo on your card.
In practice, a negative balance on a prepaid card can only arise if the issuer charges costs for canceling or not using the card, the so-called inactivity costs . It can be a few USD per month if you no longer use the card after a while. For example after three months.
The card provider will automatically debit this. If there is not enough balance left, then you will end up in the min.
The inactivity costs are an important source of income for card providers, as they cannot charge borrowing interest.