Consumer Bureau asks for input on prepaid cards

Consumer Bureau asks for input on prepaid cards
© Greg Nash

The Consumer Financial Protection Bureau (CFPB) is asking the public to comment on some proposed changes to its rules for prepaid cards. 

Under the proposed changes, a consumer would have to register their prepaid card in order to dispute unauthorized charges and take advantage of the full slate of consumer protections provided by the rules.

The bureau is also trying to make it easier for consumers to link traditional credit cards to digital wallets that can hold funds. Under the CFPB’s proposal, neither the linked traditional credit card nor the digital wallet would be subject to requirements for “hybrid prepaid-credit cards” — those that allow consumers to borrow funds — such as the required 30-day waiting period to link the account to the wallet. 

Another change would allow financial institutions to send consumers their long-form fee disclosures electronically if the prepaid card was purchased in a retail store.   

CFPB also wants to refer to the Oct. 1, 2018 effective date in the text of the rule as the compliance date to avoid any confusion. In March, the bureau delayed the rule by six months, kicking the effective date to April 1, 2018. 

Any prepaid account agreements financial institutions plan to offer as of Oct. 1, 2018 must be submitted to the bureau by Oct. 31, 2018.

The public is asked to submit comments on the proposed changes in the next 45 days. 

“We know that effective implementation helps our rules deliver their intended value to consumers,” CFPB Director Richard Cordray said in a statement. 

“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.”  

Allied Progress, a liberal group that seeks to hold Wall Street firms accountable, praised CFPB for listening to industry and consumer groups to produce the best protections possible.  

"Despite attempts in Congress to help big campaign donors by throwing millions of prepaid cardholders under the bus, the Consumer Bureau continues to move in the right direction,” Karl Frisch, executive director of Allied Progress said in a statement.