The Consumer Financial Protection Bureau (CFPB) extended the effective date of its 2016 prepaid rule by one year to April 2019 and finalized other changes.
The prepaid rule set guidelines on how to deal with funds on lost or stolen cards, investigating and resolving errors, fee disclosures, access to account information, and overdraft protection measures. The new changes adjust requirements for resolving errors, provide more flexibility for credit cards linked to digital wallets, and extend the effective date to April 2019.
Prepaid accounts are typically bought online or at retail stores, already loaded with funds by a consumer, an employer, or a third party. Consumers can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money. The use of prepaid cards grew from about $1 billion in 2003 to nearly $65 billion in 2012 – and by 2020, that is expected to double.
Regarding error resolution, CFPB proposed in June 2017 amendments to require consumers to register their accounts to receive fraud and error protection benefits, like the right to dispute charges and have stolen money restored. It also proposed to extend the protections retroactively to suspected thefts or disputes occurring before the account was registered.
These new changes now state error resolution and liability limitation protections would only apply prospectively, after a consumer’s identity has been verified.
The bureau extended the deadline in response to comments from industry claiming they needed more time to make the necessary changes.