United States: CFPB Proposes Delayed Effective Date Of Prepaid Accounts Rule, Releases Short-Form Disclosure Guide

Yesterday, the Consumer Financial Protection Bureau (Bureau or CFPB) announced in a blog post a proposal to delay the effective date of the final rule on prepaid accounts (Final Rule) for six months to April 1, 2018. The Bureau also released, earlier this week, a guide for preparing the short-form disclosure required under the Final Rule.


According to the blog post announcing the proposed delay, the Bureau "want[s] the rule to become effective as soon as possible"; however, it has "learned that some industry participants believe they will have difficulty complying with certain provisions of the rule by the current October 1, 2017 effective date." The Bureau believes that "delaying the effective date by six months will be sufficient for industry participants to ensure they can comply with the rule."

The Bureau proposal comes in the context of—but does not expressly reference—the Trump Administration's memorandum calling for a regulatory freeze and a temporary postponement of the effective date of finalized rules for "the purpose of reviewing questions of fact, law, and policy they raise." Although the CFPB's blog post states that the agency is "not proposing to change any other part of the prepaid accounts rule at this time," the proposal itself sends a different message. Specifically, the proposal provides that:

[D]elaying the effective date will allow the Bureau to more closely evaluate concerns raised by industry participants regarding certain substantive aspects of the Prepaid Accounts Final Rule that they assert are posing particular complexities for implementation or may have negative consequences for consumers that were not anticipated or fully explained by commenters in response to the Prepaid Accounts NPRM, and to propose revisions to those provisions of the Prepaid Accounts Final Rule if it determines that amendments are necessary and appropriate.

Accordingly, the proposal suggests that the CFPB may be willing to consider substantive changes to the Final Rule. The blog entry also provides that if the Bureau "determine[s] that any substantive changes to the prepaid accounts rule are necessary and appropriate, we will issue a separate proposal and provide the public an opportunity to comment on those changes before finalizing." As a result, industry participants should identify and comment on remaining problems presented by the Rule, as well as commenting on the delayed effective date.

The proposal also comes at a time that three Congressional resolutions have been introduced to subject the Final Rule to review under the Congressional Review Act.

Comments on the proposal will be due 21 days after it is published in the Federal Register.


On March 7, 2017, the CFPB released a guide, entitled "Preparing the Short Form Disclosure for Prepaid Accounts" ("Guide"). The Guide is intended to assist financial institutions in preparing the short-form pre- acquisition disclosures required by section 1005.18(b) of the Final Rule. Using one of the model forms from the Final Rule, the Guide provides step-by-step instructions for preparing the short-form disclosure, including with respect to content, format and appearance requirements. The specific requirements of the short- and long-form pre-acquisition disclosures are discussed in our earlier client alert on the subject.

Content Requirements

The Guide steps through each of the fees and related statements required under the Final Rule. First, the Guide lists each "static fee"—i.e., the periodic fee, per-purchase fee, ATM withdrawal fees, cash reload fee, ATM balance inquiry fees, customer service fees, and inactivity fee—and outlines how each fee needs to be described in the short-form disclosure and how the disclosed fee amount needs to be determined.

For example, with respect to the periodic fee, the fee must be labeled with the appropriate term to reflect the applicable time period for which a periodic fee may be charged (e.g., "Monthly fee" or "Annual fee"). The amount of the periodic fee listed must be the highest amount that may be charged, but a financial institution may insert a symbol following the fee amount (e.g., " ") linked to a statement explaining the circumstances under which a waiver or reduction of the periodic fee may occur.

The Guide reminds financial institutions that the short-form disclosure must include information about each static fee, even if the fee is not imposed on the prepaid account or is offered free of charge. If a financial institution does not charge the customer a particular fee, "$0" must be entered as the fee amount, or where a particular feature is not offered, "N/A" must be entered in place of the fee amount to indicate the feature is not applicable.

The Guide also covers "additional fee types," which may vary for different prepaid account programs. Specifically, the short-form disclosure must include (1) the number of additional fee types charged; (2) a statement that directs the consumer to the listing of additional fee types; and (3) the names and fee amounts of up to two additional fee types that are required or permitted to be disclosed under the Final Rule.

The Guide also describes certain statements that are required under the Final Rule in the short-form disclosure, including the following:

  • Where a covered separate credit feature may be offered, the time period within which it may be offered and that fees would apply. (If no such feature will be offered, the financial institution must state "No overdraft/credit feature.")
  • A statement directing the consumer to register the prepaid account in order to qualify for FDIC deposit insurance or NCUA share insurance, as applicable. (Alternatively, a statement should be included that the funds in the prepaid account are not insured.)
  • A statement directing the consumer to the CFPB's website for general information regarding prepaid accounts.
  • A statement directing the consumer to the required pre-acquisition long-form disclosure for the prepaid account in order to view details and conditions for all fees and services, as well as a phone number that can be used to access an oral version of the long-form disclosure and a website URL to access an electronic version.

Format and Appearance Requirements

The Guide outlines the specific formatting requirements for the short-form disclosure set forth in the Final Rule. The formatting requirements include prominence and minimum font (or pixel) requirements, a tabular format for certain elements, as well as specific grouping and segregation requirements. The Guide steps through each component of the short-form disclosure and describes the applicable minimum font size or number of pixels, positioning and grouping requirements.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.