Prepaid Card Group Asks CFPB to Restructure Broad Card Restrictions

Prepaid Card Group Asks CFPB to Restructure Broad Card Restrictions

March 25, 2015         Written By Lynn Oldshue

The Network Branded Prepaid Card Association (NBPCA) has asked the Consumer Financial Protection Bureau (CFPB) to reconsider its final ruling over new laws that could harm the prepaid card industry. The Association believes the Bureau’s broad restrictions on prepaid cards could limit consumer access to certain card features, possibly leading to the removal of some categories of cards.

Brad Fauss, Interim Executive Director and General Counsel for the NBPCA, said that although the Association appreciates the CFPB’s efforts, “the imposition of unnecessary compliance burdens—when trying to fashion a one-size-fits-all rule—could ultimately limit consumer access to safe and reliable prepaid products and drive users to seek out riskier and less consumer-friendly alternatives.”

The NBPCA has several requests for modifications in the new rulings, including:

  • Define “prepaid account” to refer only to accounts used for primary transactions, similar to standard debit cards.
  • Continue allowing overdrafting features that may otherwise be eliminated under the current rules.
  • Redefine “finance charge” so it does not encompass all prepaid accounts.
  • Change the effective date for the rules so that companies have more time to adjust—going from 9 months to 18-24 months.
  • Provide a single, user-friendly pre-acquisition disclosure that eliminates duplicate content in cardholder agreements and other terms of use.

The CFPB originally proposed the new prepaid protections in November 2014, along with a “Know Before You Owe” campaign that created transparency for prepaid card fees.

CFPB Director Richard Cordray said at that time, “Our proposal would close the loopholes in this market and ensure prepaid consumers are protected whether they are swiping a card, scanning their smartphone, or sending a payment.”

According to the NBPCA though, the CFPB has gone too far in its regulations, which could be detrimental to both consumers and prepaid card issuers alike.

The complete request from the NBPCA is available on their website: Comment Letter in Response to Notice of Proposed Rulemaking on Prepaid Accounts.

The information contained within this article was accurate as of March 25, 2015. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Lynn Oldshue

Lynn Oldshue has written personal finance stories for for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue