The Consumer Financial Protection Bureau (CFPB) has extended the effective date on its 2016 prepaid card rule, among other modifications announced today (Jan. 25).
The rule, initially passed, also modified requirements for the prepaid card industry in regards to official procedure on lost or stolen cards, error resolution and investigation, fee disclosures, access to account information and overdraft features, if offered in conjunction with prepaid accounts.
The changes, apart from rolling back the effective date, also adjust requirements for resolving errors on unregistered accounts and modify stipulations for cards linked to digital wallets.
Prepaid card accounts are among the faster-growing, consumer-facing financial products; according to expert estimates, the industry has grown from a net value of around $1 billion in 2003 to nearly $65 billion as of 2012. By 2020, analysts forecast that $116 billion per year will be loaded onto prepaid cards.
According to the CFPB’s press release, the new rules regarding digital wallets will ensure consumers will “continue to receive full federal credit card protections on their traditional credit card accounts while making it easier for them to link those accounts to digital wallets that can store funds.”
The changes, according to the release, will also reduce “potentially unnecessary complications and expense to consumers who link credit cards to digital wallets.”
The implementation date change, according to the CFPB, occurred in response to public comment that required packaging changes would require more time than the implementation calendar allowed for — so the CFPB decided to extend the overall effective date a year to April 1, 2019.
The rule change has drawn some early praise from industry sources.
Jason Oxman, CEO of the Electronic Transactions Association (ETA), said, “We applaud the leadership of the CFPB in extending the overall effective date of the prepaid rule. The extension of the overall effective date to 2019, as requested by ETA, allows the industry needed time to address concerns and challenges regarding the structure and implementation of the rule. We also applaud the Bureau for addressing substantive portions of the prepaid rule that would have severely constrained the ability of prepaid providers to offer innovative financial products to the millions of Americans who need them most.”