To help facilitate the timely, efficient and secure disbursement of the Treasury Department’s economic impact payments, the Consumer Financial Protection Bureau issued an interpretive rule—which takes effect upon publication in the Federal Register—stating that, if certain conditions are met, certain government pandemic relief payments are not considered “government benefits” for the purposes of the Electronic Funds Transfer Act and Regulation E.
Under the EFTA and Reg E, government agencies are prohibited from requiring consumers to establish accounts to receive electronic funds transfers at a particular institution as a condition of receipt of a government benefit. By clarifying that the COVID-19 economic impact payments are not considered “government benefits,” the CFPB has effectively cleared the way for governments to issue these funds to consumers via prepaid cards.
“In these unprecedented times, policymakers are acting swiftly to provide consumers with needed financial support through new mechanisms and for new purposes outside of existing government benefit programs,” said CFPB Director Kathy Kraninger. “The steps we are taking today ensure that consumers can receive these payments in a fast, secure, and efficient manner.”
ABA continues to urge the IRS and Treasury to maximize the use of electronic payments, emphasizing that electronic payments are faster and more secure than paper checks.