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NAFCU's February Compliance Monitor, now available for download, features an article detailing the requirements of the CFPB's final prepaid rule, including the required disclosures, error resolution and liability limitations and overdraft services under Regulation Z.

The CFPB's prepaid rule creates new consumer protections for prepaid accounts under Regulations E and Z. The rule goes into effect Oct. 1.

Regulatory Compliance Counsel Stephanie Lyon, who authored the Monitor article, explains that the definition of a prepaid account is rather broad to ensure Regulation E protections "applied to more than just traditional reloadable prepaid cards."

She notes that disclosures specific to prepaid accounts must be provided to credit union members before opening a prepaid account. She also explains that error resolution under the rule is similar to the debit card error resolution process, requiring that credit unions promptly investigate a member's notification of unauthorized electronic funds transfers on all prepaid accounts.

While most prepaid products do not generally allow members to spend more money than is loaded onto the product, the CFPB's final rule will treat certain overdraft services for prepaid accounts as non-home secured open-end consumer credit under Regulation Z, she says, adding "another layer of complexity to this rule."

CFPB this week also released the Small Entity Compliance Guide for its prepaid rule to help financial institutions determine their compliance obligations for prepaid accounts.

This month's Compliance Monitor also features a Compliance Forum, with questions and answers about the CFPB's reporting exemption for credit unions with fewer than 10,000 credit card accounts in portfolio; and supervisory committees' responsibilities regarding annual audits.