Consumer Banking and Payments Law: 7.2.17.4 Application of State Law to Credit on Prepaid Cards
Some payday lenders have attempted to use prepaid cards issued by banks to evade state usury and payday loan laws.
Because prepaid cards with credit features are typically issued by a bank, there might be preemption issues with regard to the application of state laws.802 But state laws may still apply to any non-bank parties involved in the transaction, as agents of national banks and federal savings associations are not entitled to preemption.803