Payments Industry: CFPB’s ‘Onerous,’ ‘Complex,’ ‘Expansive’ Rule Needs Work (March 24, 2015)
The CFPB received nearly 5,800 comments on its proposed prepaid regulations before yesterday’s deadline. In addition to the NBPCA’s comment letter, several other members of the industry weighed in on the bureau’s notice of proposed rulemaking, including the Electronic Transactions Association (ETA), NetSpend, and a consortium of associations in a joint comment letter supported by the American Bankers Association, the Credit Union National Association and the Online Lenders Alliance, among others.
The CFPB’s proposed rule complex and treats prepaid cards’ overdraft feature like a line of credit, according to NetSpend, a TSYS company. The rule would “negatively impact consumers by limiting their ability to obtain funds when they are most needed. The proposal includes complex, onerous, costly and difficult-to-understand requirements for prepaid card products that include treating overdraft as a line of credit,” the company wrote.
The ETA is concerned that the NPRM’s “expansive, one-size-fits-all” definition of the term prepaid account might hinder development of products and services, and the association is recommending that the final rule focus on conventional GPR cards, not non-reloadable prepaid cards. At minimum, the definition of prepaid account should exclude digital wallets, virtual currencies and P2P services, the ETA wrote in its comment letter.
Among other aspects of the rule, the ETA also is concerned the proposed short form disclosure requirement “will create complex and unwieldy disclosures that are unlikely to help consumers and may impede their understanding of prepaid products.”
The group of associations urged the CFPB to ensure consumer protections without making prepaid accounts inconvenient or too costly for consumers. “We are concerned that the substantially increased regulatory burdens imposed by the proposed rule could hamper the ability of prepaid account companies to continue offering affordable and accessible products and services, especially to the roughly 10 million unbanked consumers in the United States,” the associations wrote in their comment letter.
Like the NBPCA, other industry players are requesting more than the CFPB’s proposed nine months to comply with the final rule once it’s been published in the Federal Register.
See related stories:
- CFPB Prepaid NPRM: 5,000+ Comments and Counting; NBPCA Comment Letter Urges Restraint, More Dialogue
- Viewpoint: Let’s Reduce Complexity and Improve Disclosure
- CFPB Issues Prepaid Account NPRM: Converging Prepaid into Bank Regulation Mainstream