CFPB Finalizes Changes to Prepaid Accounts Rule and Extends Effective Date
The changes are designed to provide more flexibility for consumers using prepaid accounts and cards.
1/26/2018 11:00 AM
The Consumer Financial Protection Bureau recently finalized updates to its 2016 prepaid rule and extended the effective date by one year to April 2019.
The bureau’s 2016 prepaid rule put in place requirements for treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts, according to a news release from the CFPB. The changes announced Jan. 25 adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 2019, it reports in the news release.
The changes to the prepaid rule will:
- Adjust error resolution requirements: In June 2017, the bureau proposed amendments to require consumers to register their accounts to receive fraud and error protection benefits, such as the right to dispute charges and have stolen money restored, and to extend the protections retroactively to suspected thefts or disputes occurring before registration was successfully completed. The changes provide that the error resolution and liability limitation protections apply prospectively, after a consumer’s identity has been verified. These changes will help encourage prompt registration and streamline compliance for financial institutions as well as ensure continued availability and utility of prepaid accounts for consumers.
- Provide more flexibility concerning credit cards linked to digital wallets: Digital wallets provide consumers with an electronic way to use their debit and credit cards. Some digital wallets are also prepaid accounts because consumers can use them to store and access funds directly. The rule changes ensure that consumers continue to receive full federal credit card protections on their traditional credit card accounts while making it easier for them to link those accounts to digital wallets that can store funds. The changes also reduce potentially unnecessary complications and expense to consumers who link credit cards to digital wallets.
- Extend the overall effective date of the rule by one year: The bureau is sensitive to the concerns raised by commenters about needing more time to implement the rule, especially where they are making changes to packaging for prepaid cards sold in stores. The bureau is thus extending the overall effective date of the rule by an additional year, to April 1, 2019.
The bureau also finalized certain other clarifications and minor adjustments to aspects of the prepaid rule. More information about the changes and the bureau’s 2016 prepaid rule are available on the CFPB’s website.
Read more on the changes in The Hill.
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