CFPB Seeks Comment on Proposed Changes to Prepaid Rule

On Thursday, June 15, the CFPB announced it is seeking comment on proposed updates to its prepaid rule. The Bureau issued its prepaid rule in 2016 in an attempt to require banks to limit consumers’ losses when funds are stolen or cards are lost.


The agency is seeking comment on several adjustments to the prepaid rule. The proposal addresses concerns raised by prepaid companies about what they described as unanticipated complexities with certain aspects of the rule not fully addressed in comment letters on the 2014 prepaid proposal. The proposed changes would:


  • Adjust error resolution requirements: The Bureau is seeking comment and additional details on concerns raised by industry after the prepaid rule was finalized about error resolution on unregistered prepaid accounts. Some companies have claimed fraud concerns could lead them to changes with potential negative outcomes for consumers who do not register their accounts. Accordingly, the Bureau is seeking comment on whether to change the rule’s approach to error resolution. Under the proposal, consumers would need to register their accounts to receive full fraud and error protection benefits such as the right to dispute charges and have stolen money restored. The proposal would require companies to provide these protections to registered accounts even if the theft or dispute occurred before registration was successfully completed.  


  • 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 proposal would ensure consumers continue to receive full CARD Act protections on their traditional credit card accounts while making it easier for them to link those accounts to their digital wallet prepaid accounts. 


Based on feedback from prepaid companies, the Bureau also proposed minor adjustments currently presenting obstacles to implementation. In April 2017, the CFPB delayed the general effective date of the prepaid rule by six months, to April 1, 2018. In the current proposal, the CFPB requested comment on whether a further delay would be necessary and whether an express provision addressing early compliance is needed.