WASHINGTON – A six-month delay of the Consumer Financial Protection Bureau’s (CFPB) prepaid accounts rule will not give card issuers and vendors adequate time to prepare, CUNA wrote to the bureau Monday, suggesting a 1-year delay instead. The CFPB is proposing to delay the rule’s implementation date to April 1, 2018, from the originally scheduled Oct. 1.
“A 6-month delay will not afford prepaid card issuers and vendors adequate time to make the changes necessary under the final rule, particularly regarding replacement of physical card packaging to include new disclosures,” CUNA wrote, requesting the rule become effective Oct. 1, 2018.
CUNA urged the bureau to use that extra time to examine how the rule can be revised to minimize potential unintended consequences, particularly with an eye toward limiting new regulatory requirements on credit unions offering prepaid accounts, so that such accounts remain accessible and so that credit unions and other issuers remain innovative in the payments space.
Several of CUNA’s original concerns with the then-proposed prepaid rule are present in the final. The most notable are the amendments to Regulation Z.
The final rule subjects prepaid accounts that access certain overdraft services or credit features to Regulation Z requirements by defining them as “credit cards.”
“We oppose application of Regulation Z to overdraft services on prepaid products for several reasons, including that such application will likely reduce consumer choice in the prepaid product space,” CUNA’s letter reads.
According to CFPB’s semi-annual rulemaking agenda, overdraft protection will be addressed as a separate issue in the near future. CUNA reiterated its call to the bureau that it proceed “very carefully” into the area of overdraft regulation.
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