Yesterday, the Consumer Financial Protection Bureau (CFPB) released guidance and technical specifications relating to the submission of prepaid account agreements. This information will allow prepaid issuers to start preparing to satisfy one of the Prepaid Rule’s new requirements that, with certain exceptions, all prepaid account agreements be submitted to the CFPB. With only one month left until the Prepaid Rule’s April 1 effective date and two months until the May 1 deadline for submission, issuers and the rest of the prepaid industry will need to act quickly to ensure all materials and processes are in place for timely compliance.
Under the Prepaid Rule, issuers of prepaid accounts must submit account agreements that the issuer offers, amends, or withdraws. This requirement operates on a rolling basis, meaning that issuers must make new submissions within 30 days of offering a new agreement or either amending (with substantive changes) or withdrawing a previously submitted agreement. On top of this requirement, the submission must include all possible variations of fees that could be imposed upon consumers. The agreement itself, for submission purposes, is deemed to include the new pre-acquisition short and long form disclosures. These disclosures represent one of the most significant new compliance obligations under the Prepaid Rule and issuers should carefully review these materials against the rule and relevant commentary prior to submission.
Although the compliance date for the Prepaid Rule is April 1, issuers have until May 1 to complete their submissions. The CFPB’s release yesterday announced the opening of registration for the streamlined service it will use to accept submissions. After registering with the CFPB, issuers will need to receive login credentials before actually submitting documents. The CFPB’s release also includes a number of implementation resources that issuers will find helpful, including a user guide, quick reference guide, technical specifications, and a webinar. The technical specifications require agreements to be in the form of a digitally created and text-searchable PDF (i.e., no scanned documents).
The agreement submission requirement is only one of many new obligations affecting prepaid products. Ballard Spahr’s Consumer Financial Services group recently hosted a webinar on the Prepaid Rule’s imminent April 1 effective deadline, including the most common compliance challenges under the Rule and a discussion of other key considerations for the prepaid industry to review ahead of that date, including the application of challenging fee concepts in the pre-acquisition disclosures, common disclosure mistakes, and factors for an effective online user acquisition experience.