Final Rule Creates New Prepaid Account Requirements Pursuant to the Electronic Fund Transfer Act…
November 09, 2016 / Source: FDIC
The Consumer Financial Protection Bureau (CFPB) issued a final rule establishing new consumer compliance requirements for prepaid accounts pursuant to Regulations E and Z. These requirements govern disclosures, limited liability and error resolution protections, credit features, and making account agreement information publicly available for prepaid accounts, among other provisions.
Financial institutions must comply with the rule beginning October 1, 2017, though certain provisions are not effective until October 1, 2018.
Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised institutions.
The final rule:
- Covers a range of prepaid accounts, including traditional prepaid cards, payroll cards, student financial aid disbursement cards, certain government benefit cards, mobile wallets, person-to-person payment products, and other electronic prepaid accounts that can store funds.
- Establishes pre-acquisition disclosure standards for prepaid accounts that provide consumers with account information, including fees associated with such accounts.
- Extends Regulation E coverage, including error resolution and limited liability protections, to prepaid accounts.
- Defines credit features that may be offered in conjunction with prepaid accounts and clarifies the applicability of Regulation Z's credit card rules.
- Requires financial institutions to post prepaid account agreements on their websites.
- Prohibits the application of certain practices to prepaid accounts, including offsetting debt and charging declined transaction fees.
Continuation of FIL-76-2016
Chief Executive Officer
Chief Compliance Officer
Regulation E, 12 CFR 1005
Regulation Z, 12 CFR 1026
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at https://www.fdic.gov/news/news/financial/2016/.
To receive FILs electronically, please visit https://www.fdic.gov/about/subscriptions/fil.html.
Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).