Pay Gov – November 2016, Vol. 10, Issue XIX

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The CFPB has filed a motion for a rehearing before the entire appellate court after a three-judge panel of the D.C. Circuit Court of Appeals sent shockwaves in October when it determined the structure of the bureau is unconstitutional because it’s led by a single director who can only be removed by the president for just cause.

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CFPB Snapshot: Prepaid Complaints Continue to Drop

complaint_digital_shutterstockAt a time when the prepaid industry continues to dissect the CFPB’s final prepaid accounts rule to prepare for compliance—a rule the agency says delivers “strong federal consumer protections for prepaid account users”—the number of consumer complaints related to prepaid products has decreased dramatically from the same period last year, according to the CFPB’s latest complaint snapshot released Nov. 29.

The average number of complaints pertaining to prepaid products between August and October totaled 205, a 51 percent decrease compared with 417 complaints during the same period a year ago. It’s worth noting; however, that prepaid-related complaints for this period last year correspond to the CFPB soliciting complaints via Twitter, and it’s by far the most prepaid complaints of any period since the CFPB began collecting consumer complaints. Last month, the CFPB received 182 consumer complaints about prepaid products, a 4 percent decrease from September’s total of 189.

Prepaid products continue to garner the fewest complaints among the financial products the CFPB’s snapshot tracks, with the exception of “other financial services”—a difference of 2 complaints last month. Of the 27,010 consumer complaints the bureau received in October, prepaid represented a fraction of 1 percent. Total prepaid-related complaints are miniscule compared with those related to other financial services, such as debt collectors (7,749 or 29 percent), credit reporting agencies (5,369 or 20 percent) and mortgage companies (4,357 or 17 percent).

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Cachet Revamps Prepaid Mobile Platform for Faster App Design, Deployment

speedometer_fast_shutterstockCachet Financial Solutions has upgraded its Pay Award-winning Select Mobile Money prepaid mobile platform with enhancements that enable program managers to design and launch branded apps more quickly, as well as provide cardholders with a new international money transfer service.

Using a new administrative Web portal, Cachet’s program manager clients can view the branding and customization of their mobile apps as they’re created, reducing the design cycle from two or three months to as little as hours—thereby speeding time to market and lowering development and deployment costs, according to Cachet. The enhanced Select Mobile Money platform now also offers a fully integrated international money transfer capability powered by Viamericas’ Vianex Money Transfer as a Service. Nearly all of Cachet’s major clients already have upgraded to the enhanced platform or have committed to do so, said the Minneapolis-based mobile fintech specialist.

The enhanced capabilities were added as a result of feedback and requests from existing Select Mobile Money clients, said Cachet CEO Jeffrey Mack. By streamlining the design and deployment process, the platform now offers “a much stronger value proposition to any business looking to start a prepaid card program,” he noted. Meanwhile, the enhanced money transfer service is aimed at extending the life of a prepaid card, resulting in “stickier, more profitable customer relationships,” Mack added.

Cachet previously updated Select Mobile Money in October 2015, adding features addressing security and cardholder engagement. Earlier that year, the platform launched an integration with Apple Pay for POS transactions. Cachet was named a Judges’ Choice winner at the 2015 Pay Awards for the NFCU Visa Buxx prepaid app, which is powered by Select Mobile Money.

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PFS Issues Prepaid Mastercard for Refugees in Greece

Health-Sign_iconTo improve the plight of refugees in Greece, Prepaid Financial Services (PFS) has partnered with Samaritan’s Purse, a Christian international relief organization, to launch a financial aid program in which funds are being disbursed via a Mastercard-branded prepaid card. U.K.-based payments technology provider PFS is issuing the cards.

The prepaid card program is providing a secure way of distributing funds and enabling refugees to purchase what they need at local stores or access cash at ATMs “in a dignified way that supports resilience,” according to the announcement. More than a million people have fled Syria, Iraq and other unstable countries in the region, and as more countries close their borders, 50,000-plus refugees are stuck in makeshift camps in Greece that lack food, water and other necessities, according to the Samaritan’s Purse Website.

“As the migrant crisis in Europe continues, PFS is pleased to provide a solution that will help Samaritan’s Purse manage fund disbursements, while also supporting financial inclusion, and giving financial stability to refugees and asylum seekers,” said PFS CEO Noel Moran. “Although the scheme has rolled out very recently, we are confident that this new method of distributing funds will alleviate pressure on Samaritan’s Purse, letting them focus on continuing to improve conditions and support people in camps.” PFS also has launched prepaid card programs for immigration processing centers in the EU to help distribute funds to people seeking asylum.

Prepaid card providers have played a key role in assisting with humanitarian efforts. Mastercard announced last April it was teaming up with World Vision International, a relief organization, to deliver humanitarian aid assistance using electronic payment technologies, including the Pay Award-winning Mastercard Aid Network. And, in May, Mastercard announced the launch of Mastercard Humanitarian Aid Solutions, which combines Mastercard Aid Network, Mastercard Send money transfers, and the network’s prepaid capabilities and financial services partnerships to offer faster access to aid, including digital cash and vouchers.

Oxfam, a consortium of humanitarian organizations, along with Visa, i2c and UnionBank last year worked together to create the Electronic Prepaid Solution Project, a platform that addresses the challenges in humanitarian cash transfer programs. The program included the Oxfam Visa Prepaid Card.

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CFPB Warns Banks about Deceptive Sales Practices

bank_supervision_eyes_iconIncentives that banks offer employees to increase sales can pose “significant” risks to consumers, the CFPB warned this week in a new bulletin following record fines assessed to Wells Fargo for opening millions of unauthorized consumer accounts.

The bulletin said that the “intended and unintended effects of incentives can be complex, which makes this subject worthy of more careful attention by institutional leadership, compliance officers and regulators alike.” The federal agency goes on to acknowledge that “properly implemented and monitored” incentives can attract and retain top employees and can lead to better customer service.

The bulletin directly addresses how sales goals set by financial services firms can lead to the opening of unauthorized accounts, or lead to the enrollment of consumers in services they did not request. The CFPB on Sept. 8 announced a $100 million fine against Wells Fargo for what the agency called “widespread unlawful sales practices.” The agency said the fine is the largest such penalty it has ever issued. According to the CFPB, Wells Fargo employees secretly opened new accounts, into which they shifted funds from existing accounts without consumers’ knowledge or permission—often racking up fees and other charges.

That’s not the only practice the CFPB warns about in its bulletin. For example, the agency said that since its formation in 2011, it has “resolved 12 different cases involving improper practices to market credit card add-on products or to retain consumers once enrolled in these products. Tapes of sales calls showed that employees and service providers deviated from the prepared call scripts in order to market the add-on products more aggressively, and often deceptively, to sign up more consumers.”

The agency is currently fighting a court ruling that said its structure is unconstitutional.

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