Yesterday (March 23) the Network Branded Prepaid Card Association (NBPCA) formally requested that the CFPB show “restraint” as it goes into its final rule making on prepaid products.
“We appreciate the efforts of the CFPB staff to better understand the prepaid market, but we have concerns with several provisions in the proposed rule that we believe will limit consumer access to and choice among prepaid products at a time when consumer demand is at an all-time high,” said Brad Fauss, Interim Executive Director and General Counsel of NBPCA, in a news release released yesterday. “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 recognized the CFPB’s efforts to work with stakeholders but was adamant in its position that overly restrictive or broadly drawn rules could have disasterous consequences for both businesses and prepaid consumers. The advocacy group further called for an expanded dialogue to get the final rule right for consumers.
Some suggested tweaks suggested by the NBPCA:
1) Limit the definition of “prepaid account” to primary account transactions. This would mean that the CFPB’s rule making would only apply to prepaid products that are acting to take the place of a more mainstream debit card attached to a checking account.
“The CFPB has expanded its definition of “Prepaid Accounts” well beyond this suggested focus to ensnare the more than 15 types of prepaid cards in market, many of which likely will not withstand the increased costs of compliance,” the letter noted.
2. Streamline common sense pre-acquisition disclosures. The idea here is that instead of giving consumers three slightly different fee disclosures on their card products, there should instead be a single disclosure that is understandable and complete for consumers.
3. Allow for overdraft and credit. This takes issue with a new CFPB requirement that any prepaid card offering overdraft and credit features must comply with the requirements of Regulation Z. The NBPCA is concerned that imposing these new, onerous burdens and costs on overdraft products could lead to their elimination from the market.
The letter also noted that prepaid cards give otherwise underserved consumers access to their money in new ways, as well as focusing on their emerging popularity with students, businesses and governments.