Republicans in Congress have moved to repeal recently issued Consumer Financial Protection Bureau regulations governing the prepaid card industry. Rep. Tom Graves (R-Ga.) introduced a bill in the House in early February that would submit the rules to a vote of disapproval under the Congressional Review Act. A group of Republicans filed a similar measure in the Senate.
As we reported last year, the CFPB issued final rules regarding prepaid accounts in October 2016. “Prepaid accounts” are those accounts marketed or labeled as “prepaid” for use at unaffiliated merchants or ATMs, but are not linked to checking accounts, share draft accounts, or negotiable order of withdrawal (NOW) accounts. The new rules confirm that Regulation E applies to prepaid accounts and, as a result, employers cannot require their employees to receive wages through payroll cards. Furthermore, the prepaid card rules require issuers to investigate and resolve errors when consumers report fraudulent activity or errors on their accounts and provisionally credit the disputed amount during the investigation. Issuers must also provide consumers with “easy-to-understand” disclosures describing the costs associated with prepaid accounts. For those prepaid accounts that offer credit features, issuers must provide consumers with a monthly credit billing statement and are prohibited from automatically using uploaded funds to satisfy credit repayments.
“As a business guy, I have experienced first-hand the impact overregulation has on growth and innovation,” said Sen. David Perdue (R-Ga.), one of the bill’s sponsors in the Senate. “This rule is entirely too broad and would cripple the electronic payment marketplace which Georgians and millions of consumers across the country depend on.”
However, consumer groups who hailed the rules’ issuance in the fall are now expressing concern. “The CFPB’s new rules will help consumers compare cards more easily so they can find the most affordable option and give them the peace of mind that their money will be protected if their card is lost or stolen. But those safeguards will disappear if Congress passes this misguided resolution and revokes these common sense protections for consumers,” said Christina Tetreault, a staff attorney at Consumers Union.