CFPB Issues Advance Notice of Proposed Rulemaking for Prepaid Cards
Continuing its recent activity on prepaid cards, the CFPB released an Advance Notice of Proposed Rulemaking today seeking comment, data, and information about general purpose reloadable prepaid cards (GPR cards). The CFPB intends to issue a proposal extending Regulation E to cover GPR cards and, as a result, the ANPR seeks information on ten broad questions. The questions pertain to GPR cards, a specific type of prepaid card issued for a set amount in exchange for payment by a consumer and reloadable by adding funds to the card. The CFPB noted that while the ANPR refers to a “card,” “these devices may include other mechanisms, such as a key fob or cell phone application, that access a financial account.” The ANPR does not, however, apply to “closed loop” cards, such as debit cards linked to a checking account, non-reloadable cards, payroll cards, electronic benefit transfers, or gift cards.
The CFPB grouped ten questions into four broad categories: (a) regulatory coverage of products by some or all of Regulation E, (b) product fees and disclosures, (c) product features, and (d) other information on GPR cards. Specific questions include the definition of GPR cards in the context of Regulation E, potential disclosure requirements related to fees, and additional features related to GPR cards, such as overdraft, savings accounts, or the opportunity to improve credit. The CFPB’s proposed rulemaking, coupled with its field hearing conducted today, show that the Bureau is moving forward on regulating the prepaid card market and participants should consider weighing in during these early stages of proposed regulation.