October 09, 2015

43 lawmakers urge CFPB against overly burdensome prepaids rule

Noting concern with CFPB's proposed rule for prepaid accounts, 43 lawmakers recently sent bureau Director Richard Cordray a letter outlining several recommendations that meet the "shared goal of empowering consumers with valuable financial tools while maintaining a vibrant prepaid marketplace."

The lawmakers, mostly Republican senators and congressmen, wrote that the bureau "should avoid imposing overly burdensome restrictions on providers that would prevent them from meeting the growing and diverse consumer demand for innovative prepaid product."

The letter, sent last month, listed several recommendations for the bureau to consider as it works on its rulemaking, which was released in proposed form last November:

  • Consumer disclosures: The lawmakers urge Cordray to work to develop a "single, easy to understand pre-acquisition fee disclosure."
  • Implementation deadline: The letter states that the implementation deadline should not be before 24 months following publication of the final rule.
  • Overdraft: The lawmakers encourage CFPB to continue to allow discretionary overdrafts on prepaid accounts and not make the accounts subject to full Regulation Z coverage, "which could lead to their elimination from the market."

NAFCU has raised concerns about CFPB's prepaid product proposal's changes to the definition of a "finance charge," as well as its potential to limit consumer access to credit and stifle innovation in terms of products and services.