The Consumer Financial Protection Bureau announced it is seeking comment on proposed updates to its prepaid rule.
The CFPB issued the rule on prepaid accounts under the Electronic Fund Transfer Act and Truth in Lending Act on Nov. 22, 2016 and was originally set to take effect on Oct. 1, 2017. In April, the CFPB delayed the effective date by six months to Apr. 1, 2018. The new proposal requests public comment on if further delay is necessary.
The rule requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, give consumers free and easy access to account information and provide protections if credit is offered. It would also adjust requirements for resolving errors on unregistered accounts and provide greater flexibility for credit cards linked to digital wallets.
“We know that effective implementation helps our rules deliver their intended value to consumers,” CFPB Director Richard Cordray said. “Today’s request for comment shows we are listening closely to feedback on our rules to decide whether certain adjustments will help to achieve that goal.”
Now, the CFPB is seeking the public’s comment on adjustments it made to the prepaid rule. The 144-page proposal addresses the concerns raised by prepaid companies on unanticipated complexities regarding certain aspects of the rule.
Here are the CFPB’s proposed changes:
Adjust error resolution requirements: The Bureau is seeking comment and additional details on concerns raised by industry after the prepaid rule was finalized about error resolution on unregistered prepaid accounts. Some companies have claimed fraud concerns could lead them to changes that would have negative outcomes for consumers who do not register their accounts. Accordingly, the Bureau is seeking comment on whether to change the rule’s approach to error resolution. Under the proposal, consumers would need to register their accounts to receive full fraud and error protection benefits such as the right to dispute charges and have stolen money restored. The proposal would require companies to provide these protections to registered accounts even if the theft or dispute occurred before registration was successfully completed.
Provide more flexibility concerning credit cards linked to digital wallets: Digital wallets provide consumers with an electronic way to use their debit and credit cards. Some digital wallets are also prepaid accounts because consumers can use them to store and access funds directly. The proposal would ensure that consumers continue to receive full CARD Act protections on their traditional credit card accounts while making it easier for them to link those accounts to their digital wallet prepaid accounts.
Comments on the proposal are due 45 days after it is published in the Federal Register.