Summary:  Proposed Amendments to Rules Concerning Prepaid Accounts Under the Electronic Funds Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z)

12 CFR Parts 1005 and 1026

Prepared by the NASCUS Legislative and Regulatory Affairs Department
August 2017

The Consumer Financial Protection Bureau (CFPB) is proposing to amend several provisions to  Regulation E and Regulation Z, including those provisions impacting error resolution and limitations on liability for prepaid accounts where the financial institution has not completed its consumer identification and verification process; application of the rule’s credit related provisions to digital wallets that are capable of storing funds; certain other clarifications/minor adjustments and two issues relating to the effective date of the rule.

The proposed rule can be found here.  Comments are due to the Bureau by August 14, 2017.

Summary

The proposal would amend several provisions of the Prepaid Accounts Final Rule. Specifically:

  • Revising the error resolution and limited liability provisions of the Prepaid Accounts Rule in Regulation E to provide that financial institutions would not be required to resolve errors or limit consumers’ liability on unverified prepaid accounts.  However, where a consumer’s identity is later verified, financial institutions would be required to limit liability and resolve errors with regard to disputed transactions that occurred prior to verification
  • Creating 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.  The exception is designed to address complications in applying the credit provisions of the Prepaid Accounts final rule to credit card accounts linked to digital wallets that can store funds where the credit card is already subject to Regulation Z’s open-end credit card rules
  • Making clarifications or minor adjustments to provisions of the Prepaid Accounts Final Rule related to an exclusion from the definition of prepaid account, unsolicited issuance of access devices, several aspects of the rule’s pre-acquisition disclosure requirements, and submission of prepaid account agreements to the Bureau. 

Comments Requested

The Bureau is soliciting comment on the following:

Whether a further delay of the Prepaid Account Final Rule’s effective would be necessary and appropriate in light of the amendments.  Currently, the general effective date for the Final Rule is set for April 1, 2018.

Whether a specific provision addressing early compliance would be necessary and appropriate for compliance with the Prepaid Accounts Final Rule prior to its effective date.