Newsroom

The CFPB yesterday released a final rule that delays its prepaid rule until April 1, 2019; the rule was previously set to take effect this year. NAFCU has consistently urged the CFPB to rescind the rule entirely or, at the very least, exempt credit unions from it.

"NAFCU is supportive of this one-year delay to the CFPB's prepaid rule," said NAFCU Regulatory Affairs Counsel Andrew Morris. "The amendments included in this final rule are helpful at reducing some of the regulatory burden credit unions will face, but we still strongly believe that credit unions are not appropriate targets for this rulemaking.

"As CFPB Acting Director [Mick] Mulvaney recently pointed out, the amount of complaints in the prepaid space is miniscule; it'd be prudent for the bureau to focus its efforts on reassessing its regulations based on measurable risk," Morris continued.

The prepaid rule creates new consumer protections for prepaid accounts under Regulations E and Z. It was finalized by the CFPB in October 2016 and originally set to take effect Oct. 1, 2017, but the bureau has delayed its implementation after comments indicated compliance difficulties.

In addition to the one-year delay, the final rule published by the CFPB Thursday also:

• revises the error resolution and limited liability provisions to state that financial institutions are not required to resolve errors or limit consumers' liability on unverified prepaid accounts;
• provides more flexibility concerning credit cards linked to digital wallets;
• makes clarifications, minor adjustments and technical corrections to various provisions of the rule.

In an August comment letter, NAFCU requested at least a one-year delay to the rule's effective date, but reiterated its call to rescind the rule entirely because "the transition to new disclosures, new systems, and potentially new service agreements will correspond with significant costs and reduced availability of prepaid products."

NAFCU will continue to engage with the CFPB to find ways to further reduce the regulatory burden this rule places on the credit union industry.