As the CFPB prepares to issues its final prepaid rule, 2016 Pay Awards Consumer Champion NetSpend was making its own D.C. push. The prepaid financial services provider recently brought cardholders from five states—California, Missouri, North Carolina, Ohio and Texas—to meet with three Congressmen and Congressional staff members about their prepaid concerns, a NetSpend spokesperson says.
“Our goal was to make sure that cardholders are being heard on a rule that will affect their financial choices,” the spokesperson says, not identifying the representatives.
The cardholders talked about their need for optional overdraft on prepaid. “One of our cardholders explained how overdraft protection helped her take an Uber to get to work when her transmission was out and fill her son’s lunch account at school,” the spokesperson says. “We firmly believe that a change in the CFPB prepaid rule to allow prepaid companies to offer an optional overdraft on amounts under $150 is essential to meet the needs of cardholders. We are working with various members of Congress to impress upon the CFPB the need for a workable compromise in the prepaid rule that allows prepaid cardholders access to the short-term liquidity they need.”
The CFPB’s proposed rulemaking on prepaid accounts doesn’t explicitly ban overdraft. However, many experts believe the rule’s provision that any credit feature, including overdraft, associated with a prepaid card would trigger CARD Act and Regulation Z credit protections, which would make it too onerous to justify offering such a feature.
Despite assurances from CFPB Director Richard Cordray during Congressional testimony that the final prepaid rule is due out this spring, at the recent All Payments Expo in New Orleans, prepaid industry experts were anticipating a release in late spring or even into June.
- Viewpoint: Where Common Sense and Consumer Protection Converge
- Congressional Members Tell CFPB to Scale Back Prepaid Rules
- CFPB Looks to Extend Regs E & Z to Prepaid
Image Credits: holbox