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02.02.17

Can Sen. Perdue Undo CFPB Prepaid Accounts Rule?

help-button_icon1For those disappointed that President Trump’s regulatory relief executive orders wouldn’t extend to prepaid providers—and others covered under the CFPB’s final prepaid accounts rule—Sen. David Perdue (R-Ga.) may be coming to the rescue. On Feb. 1, Sen. Perdue, along with six co-sponsors, introduced joint resolution 19 that provides “congressional disapproval” for the rule, and which says that “such rule shall have no force or effect.” That represents a huge win for an industry that’s been grappling with compliance concerns ahead of the Oct. 1 effective date.

The Electronic Transactions Association has circulated a draft letter that members can send to senators to express support for the resolution, which has been referred to the Senate Banking Committee. The letter echoes the ETA’s earlier calls for House and Senate leadership to use the Congressional Review Act (CRA) to remove what the association describes as an “overly prescriptive and sweeping” regulation.

The NBPCA also felt the rule overreached by encompassing so many different types of products. The rule applies to traditional GPR prepaid cards, nonreloadable general use prepaid cards (other than gift cards), mobile wallets, P2P payment products and other electronic accounts that can store funds. In addition, the rule covers payroll cards, student financial aid disbursement cards, tax refund cards and certain federal benefit cards. “Instead of fostering financial innovation and inclusion, the CFPB’s rule will ultimately limit access to an essential mainstream consumer product that helps millions of Americans participate in the digital economy, affordably manage funds and safely hold money,” Brad Fauss, NBPCA President and CEO, said last fall.

“The CFPB’s final rule applies a one-size-fits-all approach to a wide range of different financial products, all of which have different features and functionalities,” the ETA said in its letter. The co-sponsors of Perdue’s resolution, all of them Republicans are: Tom Cotton, Arkansas; Johnny Isakson, Georgia; Ron Johnson, Wisconsin; Mike Lee, Utah; James Lankford, Oklahoma; and Mike Rounds, South Dakota.

perdue_davidThe potential impact of Perdue’s bill appears significant. But a recent report in The Hill notes that the CRA only has been used once to invalidate a fairly minor OSHA rule on workplace ergonomics in 2001.

Perdue’s resolution comes as the CFPB released a 158-page compliance guide to help businesses comply with the prepaid rule, and to “highlight information that may be helpful in implementing the prepaid rule.” Among the areas covered by the guide are receipts, disclosures, payroll cards and government benefit accounts, and prepaid account agreements.

The CFPB faces more than just prepaid questions in 2017. The Trump Administration, for instance, has named a CFPB transition team as the agency prepares for a possible leadership change; Trump has  met with former U.S. Rep. Randy Neugebauer, a Republican from Texas, who is considered a candidate for taking over the agency from Richard Cordray. Meanwhile, the CFPB is fighting a 2016 court ruling that is structure is unconstitutional.

The CFPB has not stepped off the gas pedal in terms of enforcement actions though—its site lists 23 such actions since election day—and a report in The Hill suggests that if Cordray remains at the helm until the end of his term in July 2018, he would be able to issue final rules for arbitration, payday loans and perhaps debt collection.

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