On June 8, Assemblyman Troy Singleton (D) introduced New Jersey Assembly Bill 4965, which, if enacted, would closely mirror the Consumer Financial Protection Bureau’s Prepaid Rule, but also would prohibit prepaid account issuers in New Jersey from charging a number of fees to prepaid account holders.  Singleton co-sponsored a similar bill in 2012 that eventually died in committee. 

Unlike the Prepaid Rule, Assembly Bill 4965 would prohibit financial institutions from charging most types of fees, including, but not limited to: annual fees, overdraft fees, point-of-sale usage fees, fees for declined transactions, or fees for the use of an ATM owned or operated by the prepaid account issuer.  The Prepaid Rule, in contrast, does not prohibit fees but instead requires financial institutions to provide a number of disclosures about fees that consumers might incur.  Assembly Bill 4965 also would require financial institutions to provide “a table of any fees,” including an amount and description of each fee that the financial institution might charge.  Any entity violating the bill would incur a civil penalty of up to $1,000 per day for each day of non-compliance.  The bill does not, however, create an express cause of action for the New Jersey Attorney General or incorporate the New Jersey Consumer Fraud Act.  If the bill passes, it would take effect within four months of its enactment. 

As we reported here, the CFPB issued the Prepaid Rule on October 5, 2016.  The Rule applies to “prepaid accounts,” which the Bureau defines as accounts that are marketed or labeled as “prepaid” and that are redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or that are usable at ATMs.  Such accounts include payroll cards and government benefit cards but do not include gift cards or accounts used for savings or reimbursements related to certain health and dependent care.  Under the terms of the Rule, prepaid account issuers must provide two forms of “easy-to-understand” disclosures – one short and one long.  While the short form must include information about periodic fees, per-purchase fees, ATM fees, cash reload fees, customer service fees, and inactivity fees, the long form must include a complete list of all fees as well as certain other information. 

The Prepaid Rule was initially scheduled to take effect in October 2018.  However, on March 7, 2017, the Bureau proposed delaying the Rule’s effective date by six months.  As we reported in an earlier post, the Bureau is now accepting comments on proposed changes to the Rule.