By: Katherine Romano Schnack, Senior Compliance and Corporate Counsel
The Illinois Credit Union League (ICUL) and LSC provide the following update to our credit unions on the status of the Prepaid Rule issued by the Consumer Financial Protection Bureau (CFPB).
On December 21, 2017, the CFPB issued a statement that it plans to delay the April 1, 2018 effective date of the Prepaid Rule. The CFPB did not give a new effective date, but stated that it expects to issue an amended rule with a new effective date soon after the new year. As part of the most recent rulemaking in summer of 2017, ICUL and LSC urged the CFPB to delay the effective date of the Prepaid Rule to 12-18 months after the CFPB’s final Prepaid Rule is published.
The CFPB may not only delay the effective date but also change the requirements of the Prepaid Rule. We are monitoring the CFPB’s Prepaid Rule activity and will send another update to our credit unions as soon as we learn more information about the final requirements of the Prepaid Rule and any extension of the effective date.
As you may know, the Prepaid Rule would have amended Regulation E to add requirements for general purpose reloadable (GPR) prepaid cards. These new federal requirements would not apply to gift cards, which would continue to be covered by Regulation E’s existing gift card requirements. The requirements of the Prepaid Rule would include:
· New short form and long form disclosures for GPR cards, available prior to purchase, with explanation and amount of applicable fees
· Disclosure on the card of card issuer contact information for consumer to obtain terms and conditions, balance information, transaction history, or to report an unauthorized transaction
· Other disclosures, including initial disclosures currently required under Regulation E for electronic funds transfers, change in terms notices, and periodic account statements (or statements available by phone or electronically for 12-24 months dependent on request)
· Extending Regulation E’s current error resolution and consumer liability limits to GPR cards
· Submitting prepaid account agreements to the CFPB
· New requirements for overdraft programs on prepaid cards
LSC’s prepaid cards are in compliance with applicable current legal standards and any necessary changes will be made to ensure that they are in compliance with any new standards. Our teams at ICUL and LSC will continue to monitor the Prepaid Rule and will keep you informed as we learn more from the CFPB.