January 25, 2018

CFPB: Changes Finalized to Prepaid Account Rules

Changes Provide More Flexibility and Extend Effective Date to April 2019

The Consumer Financial Protection Bureau (Bureau) announced today that it has finalized updates to its 2016 prepaid rule. The Bureau’s 2016 prepaid rule put in place requirements for treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts. The changes announced today adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 2019.

Prepaid accounts are among the fastest growing consumer financial products in the United States, usually purchased at retail outlets or online. Prepaid accounts may be loaded with funds by a consumer or by a third party, such as an employer. Consumers generally can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money to others. According to industry analysts, the amount consumers put on “general purpose reloadable” prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto these prepaid cards is expected to nearly double to $116 billion by 2020.

Today’s changes to the prepaid rule will:

The Bureau also finalized certain other clarifications and minor adjustments to aspects of the prepaid rule. More information about today’s changes and the Bureau’s 2016 prepaid rule is available at www.consumerfinance.gov/prepaid-rule.

Today’s final rule is available at: https://files.consumerfinance.gov/f/documents/cfpb_prepaid_final-rule_2018-amendments.pdf

This post was originally published here.