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CFPB Proposes Delay, Potential Tweaks on Prepaid Rule

delayed_stampPrepaid stakeholders scrambling to meet the Oct. 1, 2017, effective date for the CFPB’s final rule on prepaid accounts can take a breath. The CFPB has proposed delaying the effective date by six months—and has signaled it might be open to tweaking some aspects of the rule.

In a Notice of Proposed Rulemaking (NPRM) released on Mar. 9, the CFPB proposed pushing back the effective date of the final rule to April 1, 2018. Citing industry participants’ concerns about difficulties complying with certain provisions of the rule, the bureau characterized the potential six-month delay as a way to “facilitate compliance … and to allow an opportunity for the bureau to assess whether any additional adjustments to the Rule are appropriate.” The CFPB is seeking industry input on the proposed delay and whether six months is the appropriate amount of time for such an extension.

A delay would be a welcome reprieve for prepaid issuers, program managers and other stakeholders, many of whom have expressed concern over the original implementation period, which would have been less than a year from the rule’s issuance on Oct. 5, 2016. Specifically, many parties noted potential difficulties in pulling and replacing prepaid access products and packaging materials that are covered under the final rule’s disclosure requirements but were produced before the final rule’s release, according to the NPRM. Stakeholders also raised related concerns about the production capacity of packaging manufacturers and other supply chain limitations leading up to the Oct. 1, 2017, effective date, due to increased demand by the industry on a limited number of manufacturers.

Along with giving stakeholders more time to prepare, a delay also would enable the CFPB to “more closely evaluate” concerns raised by industry participants about “substantive aspects of the final rule that they assert are posing particular complexities for implementation or may have negative consequences for consumers” that were not anticipated or fully explained by commenters during the original comment period after the NPRM on prepaid accounts, issued in November 2014. Furthermore, the bureau could “propose revisions to those provisions of the Prepaid Accounts Final Rule if it determines that amendments are necessary and appropriate.”

The Network Branded Prepaid Card Association (NBPCA) was among those that actively voiced industry concerns to the CFPB over what its members view as problematic aspects of the rule and its implementation. The industry group welcomed the bureau’s proposal to delay the effective and re-examine elements of the rule.

“NBPCA appreciates the CFPB for listening to our members’ concerns and giving providers an additional six months to comply with the nearly 1,700-page rule,” said Brad Fauss, president and CEO, NBPCA. “Since the final rule was released last fall, NBPCA and its members have been in close contact with the bureau, frequently meeting to highlight the challenges of a rushed implementation date and the potential impacts to the industry and, most importantly, consumers.”

Fauss said the industry group was “especially appreciative” of the efforts of U.S. Rep. Scott Tipton (R-Colo.) and Sen. Mike Rounds (R-S.D.), along with “dozens of other members of Congress who have weighed in with their support for common-sense, balanced prepaid regulations which both encourage continued innovation and protect consumers.” Looking ahead, Fauss said the NPBCA looks forward to “continuing our work with the bureau to address our other substantive issues with the final rule during the upcoming notice-and-comment period.”

Legislators, with support from the Electronic Transactions Association (ETA), have introduced three joint resolutions in Congress that would repeal the final prepaid accounts rule using the Congressional Review Act. The ETA described the rule, which covers mobile wallets and person-to-person payment products, as “overly prescriptive and sweeping” regulation.

Comments on the NPRM to delay the rule are due 21 days after its publication in the Federal Register and may be sent to the CFPB by any of the following methods:

Email: FederalRegisterComments@cfpb.gov. Include Docket No. CFPB-2017-0008 or RIN 3170-AA69 in the subject line of the email.

Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street, NW, Washington, D.C., 20552.

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