Washington, D.C. – The Consumer Financial Protection Bureau (Bureau) announced today that it has finalized updates to its 2016 prepaid rule. The Bureau’s 2016 prepaid rule put in place requirements for treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts. The changes announced today adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 2019.
Prepaid accounts are among the fastest growing consumer financial products in the United States, usually purchased at retail outlets or online. Prepaid accounts may be loaded with funds by a consumer or by a third party, such as an employer. Consumers generally can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money to others. According to industry analysts, the amount consumers put on “general purpose reloadable” prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto these prepaid cards is expected to nearly double to $116 billion by 2020.
Today’s changes to the prepaid rule will:
- Adjust error resolution requirements: In June 2017, the
Bureau proposed amendments to require consumers to register their accounts to
receive fraud and error protection benefits, such as the right to dispute
charges and have stolen money restored, and to extend the protections
retroactively to suspected thefts or disputes occurring before registration was
successfully completed. Today’s changes provide that the error resolution and
liability limitation protections apply prospectively, after a consumer’s
identity has been verified. These changes will help encourage prompt
registration and streamline compliance for financial institutions as well as
ensure continued availability and utility of prepaid accounts for consumers.
- Provide more flexibility concerning credit cards linked
to digital wallets: Digital wallets provide consumers with an electronic
way to use their debit and credit cards. Some digital wallets are also prepaid
accounts because consumers can use them to store and access funds directly. The
rule changes ensure that consumers continue to receive full federal credit card
protections on their traditional credit card accounts while making it easier
for them to link those accounts to digital wallets that can store funds. The
changes also reduce potentially unnecessary complications and expense to
consumers who link credit cards to digital wallets.
- Extend the overall effective date of the rule by one
Bureau is sensitive to the concerns raised by commenters about needing more
time to implement the rule, especially where they are making changes to
packaging for prepaid cards sold in stores. The Bureau is thus extending the
overall effective date of the rule by an additional year, to April 1, 2019.
The Bureau also finalized certain other clarifications and minor adjustments to aspects of the prepaid rule. More information about today’s changes and the Bureau’s 2016 prepaid rule is available at www.consumerfinance.gov/prepaid-rule.
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations; by making rules more effective; by consistently enforcing federal consumer financial law; and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.