The Consumer Financial Protection Bureau ("CFPB") delayed the effective date of final rules on prepaid accounts by six months. The new effective date is April 1, 2018.
In October of 2016, the CFPB adopted a final rule to enhance consumer protections for prepaid accounts subject to Regulation E (which implements the Electronic Fund Transfer Act) and Regulation Z (which implements the Truth in Lending Act).
As previously reported, once in effect, the final rule will:
- extend the limited liability and error resolution requirements under Regulation E to all prepaid accounts;
- establish pre-acquisition disclosure requirements for prepaid accounts that require both short- and long-form disclosures before consumers can buy the prepaid accounts;
- create an alternative to the periodic statement requirements of Regulation E, under which financial institutions may give customers electronic access to information about their prepaid accounts, instead of sending periodic statements;
- require all issuers of prepaid accounts to submit, on an ongoing basis, their prepaid account agreements to the CFPB;
- regulate overdraft credit features that may be offered in conjunction with prepaid accounts; and
- establish that, subject to certain exceptions, the above-mentioned overdraft credit features will be covered under Regulation Z when: (i) the prepaid account issuer, its affiliate or its business partner offers the credit feature, and (ii) credit can be accessed during the course of a transaction carried out with a prepaid card.
The CFPB also announced that it will be revisiting two substantive issues in a forthcoming notice and comment rulemaking process related to (i) the linking of credit cards to digital wallets that are capable of storing funds and (ii) error resolution and limitations on liability for prepaid accounts that cannot be registered, have not yet been registered, or for which consumers have attempted but have not successfully completed the registration process.
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