CFPB Expects to Further Delay Prepaid Account Rule’s Effective Date

By Eric A. Love

On December 21, 2017, the Consumer Financial Protection Bureau (CFPB) issued a statement providing a status update about its comprehensive final rule amending the implementing regulations for the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) as applied to prepaid accounts (Final Rule).

The Final Rule extends Regulation E protections to prepaid accounts, thus requiring financial institutions to give consumers easy access to account information, investigate and resolve erroneous charges, and limit consumer liability for unauthorized charges in certain circumstances.  In addition, the Final Rule applies Regulation Z protections to prepaid accounts that are linked to credit products.  The Final Rule also sets forth certain requirements concerning disclosures and account terms posting and submission.

In its statement, the CFPB indicated that it anticipates finalizing a rule “soon after the new year” to amend particular aspects of the Final Rule.  The statement also notes that, as part of this process, the CFPB also expects to delay the April 1, 2018 effective date of the Final Rule to provide more time for implementation.  The CFPB previously delayed the Final Rule’s original October 1, 2017 effective date by six months.  It also issued a proposed rule in June 2017 to amend portions of the Final Rule concerning credit cards linked to digital wallets and error resolution for unregistered accounts (among others).

Although it is not yet clear how long the effective date will be further extended, many prepaid account providers continue to support a one-year delay (until April 2019) so that they have additional time to comply with the Final Rule’s expansive new requirements related to disclosures, prepaid accounts that are linked to credit products, and other areas.  The CFPB’s brief statement is available here.

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