Prepaid cards are one of the most popular payment methods available today. They offer convenience, affordability, and flexibility, allowing users to make transactions without fear of overspending. To ensure that customers benefit from these advantages, regulations have been established to protect consumers. In 2016, the Consumer Financial Protection Bureau (CFPB) issued the final Prepaid Rule that it had begun working on in 2012. This seemed like it would be the end of the prepaid regulatory discussion for the time being. Then the elections happened and it looked like the final rule might get thrown out, but that didn’t happen. All the while, the prepaid industry was working on trying to fix some problems in the more than 1600-page rule. While it means the rule is anything but final, there is hope that some problems might get fixed now that CFPB has opened another comment period on the rule. The Hill has summarized some of the proposed changes.
The Consumer Financial Protection Bureau (CFPB) is asking the public to comment on some proposed changes to its rules for prepaid cards.
Under the proposed changes, a consumer would have to register their prepaid card in order to dispute unauthorized charges and take advantage of the full slate of consumer protections provided by the rules.
The bureau is also trying to make it easier for consumers to link traditional credit cards to digital wallets that can hold funds. Under the CFPB’s proposal, neither the linked traditional credit card nor the digital wallet would be subject to requirements for “hybrid prepaid-credit cards” — those that allow consumers to borrow funds — such as the required 30-day waiting period to link the account to the wallet.
It is likely that the reopening of the comment period will bring up additional things that the industry and consumer advocates would like to see changed. However, the new comment period is a testament to the industry’s persistence in lobbying and the CFPB’s willingness to consider ways to improve the prepaid rules they issue.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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