The CFPB has filed an amicus brief in Mohamed v. Bank of America, N.A. in which it argues that a prepaid card loaded with pandemic-related unemployment benefits is a “prepaid account” subject to Regulation E, including its error resolution requirements for investigation of consumer disputes.
Regulation E, which implements the Electronic Fund Transfer Act, defines the scope of a covered “account” to include “a prepaid account,” and specifically identifies a “government benefit account” as a category of “prepaid account.” 12 C.F.R. § 1005.2(b)(3)(i)(B). Regulation E also contains certain exclusions from the definition of a prepaid account, including an exclusion for “[a]n account that is directly or indirectly established through a third party and loaded only with qualified disaster relief payments.”
The district court dismissed the plaintiff’s complaint alleging that the bank had violated the Regulation E error resolution requirements in its handling of his claim that an error had occurred in his prepaid account. According to the district court, the plaintiff’s prepaid card did not meet the definition of an account subject to Regulation E because it fell within the exclusion from “prepaid accounts” for accounts established through a third party and loaded with qualified disaster relief payments. The plaintiff filed an appeal with the U.S. Court of Appeals for the Fourth Circuit.
In its amicus brief, Bureau argues that exclusion for accounts loaded with disaster relief payments from the “prepaid accounts” that are “accounts” covered by Regulation E does not apply to “prepaid accounts” that are “government benefit accounts.” According to the Bureau, the plaintiff’s prepaid card qualifies as a “government benefit account,” which is defined an “an account established by a government agency for distributing government benefits to a consumer electronically…but does not include an account for distributed needs-tested benefits in a program established under state or local law or administered by a state or local agency.” The Bureau takes the position that even if the plaintiff’s account is also a type of “prepaid account” that would be subject to the exclusion for disaster relief payments, it would nevertheless not be subject to the exclusion “because satisfying any one type of [prepaid] account is sufficient to qualify as a covered account.”