CFPB Amends Prepaid Account Rule
March 6, 2018
The Consumer Financial Protection Bureau (CFPB) has issued final rule amendments to the Prepaid Account Rule. The final rule amendments make three major changes to the Prepaid Account Rule.
- Extends the effective date by one year.
- Adjusts and clarifies the error resolution requirements.
- Provides more flexibility concerning credit cards linked to digital wallets.
What is the new effective date?
The recent final rule amendments to the Prepaid Account Rule pushes back the effective date of the Prepaid Account Rule to April 1, 2019.
What are the changes to the error resolution requirements?
The revised error resolution requirements and limited liability provisions stipulate that a financial institution is not required to resolve errors or limit a consumer’s liability under Regulation E on prepaid accounts that have not been verified. For those accounts where the consumer’s identity is later verified, the financial institution is not required to limit the consumer’s liability or resolve errors on disputed transactions that occurred prior to the account being verified.
What are the changes with regards to digital wallets?
The final rule amendments create a limited exception to the credit-related provisions of the Prepaid Accounts Rule in Regulation Z for certain business arrangements between prepaid account issuers and credit card issuers that offer traditional credit card products. This exception is designed to address certain complications in applying the credit provisions of the Prepaid Account Rule to credit card accounts linked to digital wallets that can store funds where the credit card accounts are already subject to Regulation Z’s open-end credit card rules in circumstances that appear to pose lower risks to consumers. This final rule also expands the situations in which prepaid account issuers are permitted to run negative balances on prepaid accounts, provided certain conditions are met.
Where can I see the final rule amendments myself?
You can access the final rule amendments on the CFPB’s website here.
Question of the Week
Do transfers initiated through a mobile device require a receipt with the transaction?
No. Like transfers and bill payments that are initiated by the member through their online banking, transactions on mobile devices are considered analogous in function to a telephone. These transactions are considered electronic funds transfers and are covered under Reg E, but are not considered to be initiated at an electronic terminal such as an ATM or POS and do not require a receipt at the time of the transaction.
The transactions will need to be clearly identified on the periodic statement.
National Credit Union Administration (NCUA)
The NCUA announced a live Facebook event on Wednesday, March 7th to discuss how consumers can safeguard their identities and finances from scammers. The event will begin at 2 p.m. Eastern and no registration is required.
The NCUA has released its first quarter, 2018 issue of The NCUA Report. This issue features articles on the share insurance distribution, DDoS attacks targeting payment systems, a new tool focused on enhancing cybersecurity assessments, and call reporting modernizations.
NCUA Chairman McWatters delivered a speech at CUNA’s Governmental Affairs Conference (GAC). McWatters’ speech focused on the successes of the NCUA over the past year.
NCUA board member Metsger delivered a speech at CUNA’s GAC. Metsger focused on the accomplishments of the NCUA, with a strong emphasis on the recent announcement of the $736 million share insurance distribution expected during the third quarter of this year.
Consumer Financial Protection Bureau (CFPB)
The CFPB issued a Request for Information on Consumer Complaint Reporting. The Bureau is seeking comments on the usefulness of complaint reporting and analysis.
Federal Reserve Board (FRB)
The FRB released its Monetary Policy Report.
The FRB released its discount rate meeting minutes from January 22 and January 31, 2018.
Federal Trade Commission (FTC)
The FTC released its Annual Summary of Complaints Reported by Consumers. The FTC reported that the number of complaints about fraud dropped in 2017, although more money was lost by consumers in 2017 than in 2016.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of February 27, 2018. The last update prior to this was February 26, 2018.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.
Posted in Compliance.