In its new report containing its findings from a survey of prepaid card users, The Pew Charitable Trusts urges the CFPB’s “speedy adoption” of its proposed prepaid card rule. The CFPB’s proposal, which would mandate new disclosures, error resolution procedures, consumer liability limits for unauthorized transactions, fee limits, and added requirements for cards with overdraft or credit features, was issued in November 2014. In its Spring 2015 agenda, the CFPB indicated that it expects to issue a final rule in January 2016.
The Pew report states that its findings are based on “a nationally representative telephone survey of [general purpose reloadable] prepaid cardholders—defined as adults who use these cards at least once a month.” Among the report’s key findings are that:
- Prepaid card use is becoming more common, with use jumping by more than 50 percent between 2012 and 2014
- Unbanked prepaid cardholders use their prepaid cards more like traditional checking accounts and to manage their budgets, checking their balances more regularly, reloading more frequently, and registering their cards more often than banked cardholders do
- Most prepaid card users do not want the option to overdraw their accounts
- Most users do not know whether their liability for fraudulent use is limited, funds are FDIC-insured, or cards have arbitration clauses
According to Pew, its findings “demonstrate the need for the [CFPB] to finalize its proposed rules on prepaid cards.” Pew “commends the CFPB for the proposed rule” and states that it “would promote clear disclosure and ensures protections that limit liability for unauthorized transactions and ban high-cost credit products.”
Among the issues highlighted in comments on the proposal submitted by industry are the difficulties industry members would face in implementing the proposal’s new disclosure requirements as well as the vagueness of other new requirements. We are hopeful that the CFPB’s timetable is an indication that the CFPB is giving careful consideration to these comments.