Intense Industry Reaction Quickly Follows CFPB Prepaid Rules
The CFPB might have taken two years to release its final rules on prepaid accounts, but it took little time for payments industry players and observers to weigh in on them. Within a day of the rules’ release, which go into effect Oct. 1, 2017, prepaid services giant Green Dot Corp., the Independent Community Bankers of America (ICBA), the Consumers Union and the Network Branded Prepaid Card Association (NBPCA) all had issued official comments, covering the spectrum of support for the new mandates.
The day the rules were published, Oct. 5, Green Dot CEO and Founder Steve Streit announced the company’s support of “the CFPB’s mission to ensure fairness, integrity and consumer protections” for consumers. “For many years, Green Dot has voluntarily provided full checking account-style consumer protections for its customers and has never charged overdraft or penalty fees on Green Dot Bank’s prepaid and checking products,” Streit said. “It’s gratifying to know that prepaid can now move to a level playing field that can better serve consumers while allowing the entire industry to move past the period of regulatory uncertainty.”
Consumers Union, the policy and action division of Consumer Reports, noted in its Oct. 5 statement that the organization has lobbied for consumer protections on prepaid cards for more than a decade. “Not all prepaid cards are created equal and consumers have lacked the legal safeguards they deserve to protect their money,” said Christina Tetreault, Consumers Union staff attorney. “Now consumers will be able to compare cards more easily to find the most affordable option and have the peace of mind that their money will be safe if their card is lost or stolen.”
Although the NBPCA is still studying the rules, it noted that the “the CFPB has dismissed many of our serious concerns and moved forward with a rule that will harm the very consumers it aims to protect,” Brad Fauss, NBPCA president and CEO, said in an Oct. 5 announcement. “Instead of fostering financial innovation and inclusion, the CFPB’s rule will ultimately limit access to an essential mainstream consumer product that helps millions of Americans participate in the digital economy, affordably manage funds, and safely hold money.”
A day later, the Independent Community Bankers of America (ICBA) echoed the NBPCA’s sentiments that the rules will ultimately hurt consumers. “ICBA will continue working with the CFPB to contain the damage of this new regulation,” Camden Fine, ICBA president and CEO, said in a prepared statement. The ICBA news release also noted that in a comment letter sent March 2015, the association “strongly opposed any Regulation Z coverage for overdraft services accessed through prepaid accounts [and] urged the CFPB not to finalize more stringent overdraft requirements for prepaid accounts than currently are required for deposit accounts.”
UniRush, creator of the popular RushCard, didn’t issue an official statement, but, like Green Dot, the company said Oct. 11 it welcomes new rules protecting consumers and leveling the playing field across the prepaid industry. “We are proud of our track record of providing simple, safe and affordable products to our customers with full and transparent disclosure of all fees,” Ron Hynes, UniRush CEO, tells Paybefore. “In many cases we already provide our customers with protections stronger than what is mandated by the CFPB.”