Magazine article American Banker

CFPB Finalizes Changes to Prepaid Rule to Industry's Liking

Magazine article American Banker

CFPB Finalizes Changes to Prepaid Rule to Industry's Liking

Article excerpt

Byline: Kate Berry

The Consumer Financial Protection Bureau finalized changes Thursday to its prepaid rule by extending the effective date to April 2019, adjusting requirements for resolving errors on unregistered accounts and carving out an exception for credit card accounts linked with digital wallets.

Although the prepaid rule was finalized in 2016, acting CFPB Director Mick Mulvaney delayed it in December, after his predecessor, Richard Cordray, also delayed it. They both cited the need for adjustments after getting feedback from prepaid card issuers. The bureau had first sought input on the prepaid rule in 2012.

The rule requires companies to disclose fees on prepaid cards and cooperate with consumers who discover unauthorized charges or errors. Issuers raised several concerns about the rule, including that it would leave them on the hook for fraud losses on unregistered cards. Some issuers had wanted the CFPB to exclude digital wallets from the rule.

A major change is in the rule's error-resolution requirements and limited liability protections, which now will apply after a consumer's identity has been verified. A consumer's right to dispute charges and have stolen money restored because of a suspected theft or dispute now will be extended only after a consumer has registered their prepaid account.

"These changes will help encourage prompt registration and streamline compliance for financial institutions," the CFPB said in a press release. …

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