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The Consumer Financial Protection Bureau ("CFPB" or
the "Bureau") on May 23, 2012 announced that it is asking
for comments about general purpose reloadable prepaid cards
("GPR Cards") through an Advance Notice of Proposed
Rulemaking ("ANPR"). The Bureau intends to issue a
proposal to extend consumer protections provided under Regulation E
to GPR Cards.
Regulation E implements the Electronic Fund Transfer Act and
provides a basic framework for establishing rights, liabilities,
and responsibilities of participants in electronic fund
transactions. Unlike some other "general-use prepaid
cards" such as payroll cards, Regulation E generally does not
apply to GPR Cards. As a result, CFPB Director Richard Cordray
notes that GPR Cards have "far fewer regulatory protections
than bank accounts or debit or credit cards."
The Bureau asks for comments on issues in four broad categories:
(1) regulatory coverage of products by some or all of Regulation E;
(2) product fees and disclosures; (3) product features; and (4)
other information on GPR Cards; including:
Whether Regulation E should be applied to GPR Cards.
How the Bureau can best enable a consumer to compare various
GPR Cards or other payments products that may have different fee
structures or distribution channels.
Whether the existence, or lack thereof, of FDIC pass-through
insurance associated with a GPR Card should be disclosed to the
consumer.
Input on the costs, benefits, and consumer protection issues
related to any credit, savings, or credit reporting features that
enable consumers to improve or build credit that may be offered for
GPR Cards.
The methods by which, and under what circumstances do, market
participants communicate a change of contract terms, or other
information, to cardholders.
The ANPR defines GPR Cards as prepaid financial products that
consumers use in a manner similar to a debit card that is linked to
a traditional checking account. A GPR Card is issued for a set
amount in exchange for payment made by a consumer. A GPR Card is
reloadable, meaning the consumer can add funds to the card. While
the Bureau refers to a "card," it also indicated these
devices may include other mechanisms, such as a key fob or cell
phone application, that access a financial account.
Through the ANPR the Bureau does not seek information about
"closed loop" cards, debit cards linked to a traditional
checking account, non-reloadable cards, payroll cards, electronic
benefit transfers (EBTs), or gift cards.
The ANPR was published in the Federal Register on May 24, 2012.
The deadline for comments is July 22, 2012. The ANPR is available
online and contains information about how to submit a response.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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