CFPB proposes changes to prepaid rule

The Consumer Financial Protection Bureau announced on Thursday it is proposing updates to its prepaid rule, which was issued in 2016, and is, after an earlier change, scheduled to become effective April 1, 2018. The proposal would adjust requirements for resolving errors on unregistered accounts and provide greater flexibility for credit cards linked to digital wallets. Under the first change, 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.

The proposal affecting digital wallets would ensure that 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. The Bureau is also proposing additional minor adjustments and clarifications to aspects of the prepaid rule that industry members have expressed concerns about. Comments on the proposal will be accepted for 45 days following Federal Register publication.

UPDATE: Published in Federal Register on June 29, 2017. Comments due by August 14, 2017.

The Bureau also released an updated version of its small entity compliance guide for the rule, reflecting the April 1, 2018, effective date and clarifications on several issues for which the industry has raised questions or asked for added clarity.

• Bureau's proposal