When is a final rule final?

When is a final rule final?

Plagued by delays, threatened by US Congressional repeal and finally opened to further comment and changes, the Consumer Financial Protection Bureau’s (CFPB) final rule on prepaid accounts now has some consumer groups calling for the bureau to “strengthen” consumer protections with additional changes, while one credit union association wants the rule rescinded.

To refresh your memory, the bureau contended that its final rule would assure consumers “get their day in court,” and will “deter wrongdoing by restoring consumers’ right to join together to pursue justice and relief through group lawsuits”.

Banking Technology‘s sister publication Paybefore reports that the Consumers Union, along with half a dozen other consumer advocacy groups, submitted a joint comment letter to the bureau, requesting further changes to the rule. The groups also want the bureau to refuse any industry requests for more time to comply.

Specifically, the groups want the CFPB to expand the definition of registered or verified accounts to include compulsory-use cards issued to known persons (e.g., jury, prison release or security deposit refunds) and require that these cards be extended error resolution rights and limits on liability in accordance with Regulation E.

In addition to comments about provisions around linking prepaid cards and credit cards, the groups object to the bureau’s proposed alteration of the disclosures for compulsory prepaid accounts. Examples include government payments, such as payments for jury service; insurance or workers compensation; refunds for public utilities; security deposits on real or personal property; return of funds upon release from prison or jail; and any other funds that are legally owed to the consumer.

“The proposed amendments effectively endorse the concept that prepaid cards may be forced on consumers,” the letter says. “That is a troubling concept, and the bureau should mitigate the damage by limiting the compulsory use of prepaid accounts.”

Meanwhile, the National Association of Federally-Insured Credit Unions (NAFCU) is asking for the CFPB to rescind its final rule on prepaid accounts – which seems highly unlikely given the years of work and thousands of pages already dedicated to the effort – or exempt credit unions from the final rule.

If neither of those options strike the bureau’s fancy, NAFCU is asking for an additional year to implement the rule. “The transition to new disclosures, new systems and potentially new service agreements will correspond with significant costs and reduced availability of prepaid products,” the association writes in its letter.

The Network Branded Prepaid Card Association (NBPCA) also has requested an extension of the effective date to April 2019. The association also suggested that the bureau further evaluate the application of Reg. E to prepaid accounts to reduce fraud and requested that the exemption for loyalty, award and promotional (LAP) cards be extended to any cards not marketed to the general public.

What’s more, the NBPCA contends that prepaid account issuers should be allowed to issue credit cards linked to prepaid accounts just as third parties are permitted to do under the proposed changes.

Comments on the bureau’s proposed six-month delay in implementation and other changes to the final rule were due 14 August 2017.


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