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Prepaid cards face greater scrutiny by customs officials than credit or debit cards

Dec 03, 2012 Dave King

Prepaid stored value cards are likely to bear the brunt of scrutiny by customs agents when international visitors enter the United States, as new rules regarding declarations upon entry to the U.S. are close to finalization by the U.S. Department of Homeland Security. The new regulations will also apply to Americans re-entering the country along with foreigners who appear suspicious at airports, border crossings and seaports. Under the revised regs, the value of prepaid cards will have to be included when incoming travelers to the U.S. fill out customs declaration forms. Until now, cash, checks, money orders and travelers checks were among the items counted as currency carried into the country by a traveler. If visitors are carrying more than $10,000, they must report the amount to customs or face possible fines. While the move is aimed at curbing terrorist attacks and drug transactions, some worry that the procedure could eventually involve all credit, debit and prepaid cards in scanning. Even with the emphasis on prepaid cards, the effort is viewed as too intrusive for many people who routinely use value stored cards for every day expenses. "This is not just a burdensome hassle, it's extraordinarily unfair," attorney Judith Rinearson, a payment system specialist at the law firm of Bryan Cave in New York City, told "We know that many students, immigrants and unbanked persons use and rely on prepared cards as their primary means of making payments and managing their finances. Why does someone with a debit card or a credit card not have the same onerous requirement?" Federal response
The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) contends that prepaid cards are not as easily traceable and often are indistinguishable in appearance from traditional credit and debit cards. Other cards will also be scanned if they appear suspicious, the agency stated. However, it is the open-loop prepaid cards - which can be used at a vast number of retail outlets, online vendors and financial institutions - that have garnered the authorities' attention because they consider them particularly vulnerable to illegal activities. The website reported that individuals will not be asked for PIN or other card-related codes, even when customs scanners reveal some level of suspicion, although officials could inquire further about travelers' activities if they are found carrying a large amount of reloadable prepaid cards. Travelers are also likely to be asked the original amount that was placed on the card and an estimate of remaining value as part of the routine screening.