The cfpb issued proposed rules today for prepaid products, here is a link.

http://files.consumerfinance.gov/f/201411_cfpb_regulations_prepaid-nprm.pdf

We have included a snapshot of the proposal -- which runs to 870 pages! -- in a "Late Breaking News" item on our Top Stories page.
http://www.bankersonline.com/topstory/topstory.html

Mary Beth Guard and I plan to offer a webinar analyzing the proposal on Friday, December 19.

I've been reading some summaries on this proposal and am not sure if this will effect reloadable gift/travel cards that we sell for our vendor?

It won't affect gift cards that are already subject to Regulation E section 1005.20. However, travel cards may be affected if they are exempted from 1005.20 coverage.

I just found out our prepaid reloadable cards can't exempt a consumer from overdrawing the card.

Example: Card balance: $50.
they use it for gas but the hold is only placed for $1 when actual charge was $20.
Use card and charge $40 at restaurant.

Once true gas charge posts, there wasn't enough on the card.

I just talked with our card department. They have 2-3 of these a month. They call the consumer and ask them for permission to move $ from their checking to the card to cover the overdrawn amount.

Does this scenario qualify under the application of Reg Z to prepaid accounts?

I think I found my answer but appreciate anyones input.

Force pay transaction. "credit" includes a transaction where the consumer has sufficient or available funds in the prepaid account to cover the amount of the transaction at the time the transaction is authorized but insufficient or unavailable funds in the prepaid account to cover the amount of the transaction at the time the transaction is paid. See Comment 2(a)(14)-3

I need some clarification. We have both prepaid reloadable cards and gift cards. I know the gift cards would be exempt due to their labeling but I need more info on the prepaid reloadable cards.

These are visa branded cards so we aren't the issuer. Just the seller. I would guess VISA would give us the disclosures but for the periodic statements and liability parts, that would be us. Right? I don't know why I can't wrap my head around this.

I also found out our cards can overdraw. Doesn't happen a lot but if the gas station put a hold for $10 but it came through as $20 and there was only $10 on the card, it overdraws. We just call the consumer up and ask if we can transfer from their checking in these situations. If we don't know the consumer of course we write it off. Does this qualify under the overdraft portion of Reg Z?

It's premature to ask for answers to these questions. Remember, we are looking at a proposal, not a final rule, and it's likely there will be some significant changes when the final rule is issued.

As it happens, today was the final day for submitting comments on the proposal.