The Consumer Financial Protection Bureau today proposed several changes to its final rule on prepaid products, whose implementation has been delayed until April 1, 2018. The bureau also invited comments about whether to delay the rule’s implementation date further based on time needed to comply with the latest round of proposed changes.
Specifically, the bureau is proposing to revise the error resolution and limited liability provisions of the prepaid rule to clarify that “financial institutions would not be required to resolve errors or limit consumers’ liability on unverified prepaid accounts.” The CFPB proposed a limited exception to the prepaid rule for credit card accounts linked to “digital wallets” that customers use to store funds, since the credit card accounts are already subject to Regulation Z. The bureau also proposed several minor clarifications and technical adjustments.
The CFPB declined to address the American Bankers Association’s overarching concern that the rule still requires significant adjustment to ensure banks can confidently offer checking and prepaid accounts without liability risk. In its comments in April, ABA urged the bureau to adopt a more objective definition of “prepaid account” as any product marketed or labeled as a prepaid account or card, rather than the more subjective approach of saying it “is not a checking account, share draft account or [NOW] account.”
The bureau released an updated compliance guide for small entities. The latest version reflects the delay of the effective date and several elements of additional guidance. For more information, contact ABA’s Nessa Feddis.