The Consumer Financial Protection Bureau ("CFPB") is seeking public comment on proposed changes to the "prepaid card accounts" rule ("prepaid rule") under Regulation E and Regulation Z. The CFPB prepaid accounts rule was adopted in October 2016, and is scheduled to become effective on April 1, 2018. The proposed changes would extend various protective measures that cover prepaid accounts, including (i) limited liability and error resolution requirements, (ii) short- and long-form disclosure requirements, (iii) overdraft credit regulations, and (iv) various other reporting and consumer access requirements.
Specifically, the CFPB proposal would change two aspects of the prepaid rule:
- Error resolution: The final rule requires that institutions must resolve errors for unregistered prepaid accounts. The proposal would require consumers to register their accounts in order to receive full fraud- and error-protection benefits (such as the right to dispute charges or be reimbursed for stolen money). However, if an account is registered after the error occurs, the institution would then be required to resolve errors retroactively.
- Credit card accounts linked to prepaid accounts: The proposal would establish an exception from credit provisions of Regulation Z for "digital wallets." Digital wallets may function as prepaid accounts, but they are often linked to traditional credit card accounts. The exception would allow customers to continue to receive full protection on the traditional credit accounts that are linked to digital wallets.
The CFPB also issued a revised version of the " Small Entity Compliance Guide" to the prepaid rule.
Comments will be due 45 days after publication of the proposal in the Federal Register.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
