The prepaid rule: A big loss for McConnell and Perdue, a big win for consumers
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With no fanfare and no press, Sen. Mitch McConnellAddison (Mitch) Mitchell McConnellGOP nervous that border wall fight could prompt year-end shutdown GOP nervous that border wall fight could prompt year-end shutdown Jon Stewart slams McConnell over 9/11 victim fund MORE (R-Ky.) did something unusual and potentially unprecedented: as the sitting Senate majority leader, he signed onto a discharge petition.

Such an obscure parliamentary technique is usually used by members of the minority party to circumvent normal rules and force a vote in the chamber. It rarely works and is often deployed as a strategy to garner media attention for an issue the minority feels the majority is ignoring.


In short, it is a tool for legislators to bypass the will of the leader; it is not a tool the leader uses to pass bills.

Thursday, legislation fast-tracked by a McConnell-backed discharge petition failed to gather enough support among even Republicans to succeed before an important procedural deadline.

So, what led to this rebuke of Leader McConnell by his own party?

On March 30, Sen. David Perdue (R-Ga.) filed a discharge petition to expedite his bill repealing the Consumer Financial Protection Bureau’s (CFPB) “prepaid rule” that protects from hidden fees and other predatory practices the roughly 23 million Americans who use prepaid cards for everything from hourly wages to Social Security benefits. Perdue’s discharge petition required at least thirty signatures to skirt normal Senate procedures and it got them—including McConnell.

While repealing these important prepaid card protections would hurt nearly half a million of Perdue’s own constituents, repeal would greatly benefit NetSpend--one of Perdue’s major donors--to the tune of $80 million.

Not just another prepaid card company, NetSpend is one of the worst actors in the industry. It has a long track record of using overdraft fees and other predatory practices that deprive customers of funds that are rightfully theirs.

Coincidentally, just one day after Perdue filed his McConnell-endorsed discharge petition to gut prepaid card protections, NetSpend agreed to pay $53 million to settle Federal Trade Commission (FTC) charges that it had defrauded customers.

Despite NetSpend’s opposition, other companies and industry trade groups endorsed the Consumer Bureau’s prepaid card rule. Green Dot, the company that invented the prepaid card and is still the industry’s largest provider, backs the protections. So does the Center for Financial Services Innovation, a major financial services trade group that notes the new rule will make "it harder for bad actors . . . to flourish," while creating "an opportunity for prepaid card providers."

McConnell, Perdue, and their allies were perfectly content to repeal these important protections for working families so long as the public was not roused when they learned what was about to happen.

On April 17, the Atlanta Journal Constitution published a front page story linking Perdue’s legislation to his donations from NetSpend. Following the report, Georgia’s junior senator could hardly bring himself to defend his own legislation and instead relied largely on statements from his staff.

With little being said in the media or by those using procedural gymnastics to advance the repeal effort, consumer advocates organized to turn up the volume and defend the Consumer Bureau’s protections for prepaid cardholders.

Our group, along with many others, mounted a major initiative to educate constituents in places like Maine, Alaska and Nevada, pushing for more media coverage, organizing on a grassroots level, even mounting a six-figure television ad buy. When working families learned about Perdue’s efforts they got angry, and when they got angry they called Sens. Susan CollinsSusan Margaret CollinsDemocrats' 2020 Achilles's heel: The Senate Democrats' 2020 Achilles's heel: The Senate The Hill's Morning Report — Uproar after Trump's defense of foreign dirt on candidates MORE (R-Maine), Lisa MurkowskiLisa Ann MurkowskiHillicon Valley: Hacker group targeted electric grid | House Democrats press CBP over facial recognition program | Senators offer bill to protect health data | Groups file FCC complaint over carriers' use of location data Hillicon Valley: Hacker group targeted electric grid | House Democrats press CBP over facial recognition program | Senators offer bill to protect health data | Groups file FCC complaint over carriers' use of location data Klobuchar, Murkowski introduce legislation to protect consumer health data MORE (R-Alaska), and Dean HellerDean Arthur HellerThis week: Barr back in hot seat over Mueller report Trump suggests Heller lost reelection bid because he was 'hostile' during 2016 presidential campaign Trump picks ex-oil lobbyist David Bernhardt for Interior secretary MORE (R-Nev.) letting them know, in no uncertain terms, that they should not support Perdue’s bill.

Not one of these key senators ended up signing on with Perdue publicly; support for the bill fizzled despite having McConnell’s backing; and the legislative window for the Senate to repeal the prepaid rule with a simple majority closed for good last night. In the end, Perdue and McConnell’s failure is a huge victory for the millions of Americans who use prepaid cards. They can rest easy knowing their funds will be protected.

Moving forward, McConnell, Perdue, and the Wall Street interests they represent can still do a great deal to undermine the important work of the Consumer Bureau but the bar is now much higher when it comes to gutting these vital prepaid card protections. Prior to last night’s statutory deadline, they needed only fifty-one votes, now they need at least sixty.

So, let them bring the fight. Groups like ours will be there to call them out and hold them accountable.

Karl Frisch is executive director of Allied Progress, a nationwide progressive advocacy organization that uses hard-hitting research and creative campaigns to stand up to Wall Street and powerful special interests and hold their allies in Congress and the administration accountable.

The views expressed by this author are their own and are not the views of The Hill.