Debit Cards

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On October 3, 2022, the Federal Reserve finalized a rule expanding Regulation II (Debit Card Interchange Fees and Routing), the implementing regulation for the Durbin Amendment.  The final RULE is substantially similar to the proposed rule issued in 2021 and requires online (card not present) debit card transactions to be enabled for processing on at least two unaffiliated payment card networks. … Continue Reading

The Fed’s final rule implementing the Durbin Amendment (Regulation II) went into effect in October 2011.  Nearly ten years later, the final rule is still provoking controversy in the form of a new lawsuit and proposed amendments to the rule and its official commentary.

The Durbin Amendment (Section 1075 of Dodd-Frank) authorized the Fed to issue regulations to ensure that the amount of any interchange fee received by a large debit card issuer (one with at least $10 billion of assets, together with its affiliates) is reasonable and proportional to the cost incurred by the issuer. … Continue Reading

On April 22nd, Senator Warren, nine other Senators, and 14 members of Congress sent a letter (the “Letter”) to Secretary of Education Duncan urging that the Department of Education (DOE) exercise its rulemaking authority to regulate, limit or outright ban certain practices when colleges enter into agreements with financial providers to offer debit cards, prepaid card and other products which are used for purposes of distributing federal student financial aid to students. … Continue Reading

The U.S. Government Accountability Office (GAO) has joined the CFPB’s call for more transparency in the area of campus financial products.  Last week, the GAO issued a report on college debit cards in which the GAO recommended that Congress consider requiring financial institutions that provide debit and prepaid card services to colleges to publicly disclose their agreements. … Continue Reading

The CFPB wants financial institutions to post on their websites their marketing agreements with colleges and universities for financial products other than credit cards, such as deposit accounts, prepaid cards and financial aid disbursement accounts.  Pursuant to the CARD Act, card issuers must submit their campus credit card agreements annually to the CFPB together with their related marketing agreements and certain information, including the amount of compensation they paid to schools. … Continue Reading

Findings on campus banking products released this past Monday by the CFPB in conjunction with a Banking on Campus Forum held in Washington, D.C. appear to be a harbinger of new limitations on the marketing of these products.  The findings were based on comments the CFPB received in response to a January 2013 notice seeking input on a variety of issues with regard to these products, including the information shared between schools and financial institution providers, the way these products are marketed, the fee structures for these products, how marketing arrangements are established, and student experiences with these products. … Continue Reading

Comments made by Director Cordray in an interview with the Washington Post indicate that the CFPB will be taking an aggressive approach to rulemaking in the coming months. 

Director Cordray indicated that prepaid cards are “a real front-burner issue for us” and that the CFPB is “moving forward to write rules to make sure they are protected under the [Electronic Fund Transfer Act.]”… Continue Reading

On September 30, 2013, the CFPB will hold a forum in Washington, D.C. on financial products marketed to college students.  In January 2013, the CFPB issued a notice asking for input on a variety of issues with regard to these products, including the information shared between schools and financial institution providers, the way these products are marketed, the fee structures for these products, how these marketing arrangements are established, and student experiences with these products. … Continue Reading

Credit CardsIn addition to a flurry of news reports, the U.S. Public Interest Research Group Education Fund’s report on the use of debit cards to disburse federal financial aid to college students has also triggered a letter to the CFPB and the U.S. Department of Education by two Democrat lawmakers.  Issued last month, the report found that nearly 900 colleges and universities have agreements with financial institutions under which debit cards are issued to students to access any balance of their financial aid  remaining after amounts for tuition and fees have been deducted. … Continue Reading

By Jeremy T. Rosenblum and Stefanie H. Jackman

Recently, the Consumers Union, Center for Public Policy Priorities, Center for Responsible Lending, Coalition of Religious Communities, National Consumer Law Center, SC Appleseed Legal Justice Center and U.S. PIRG called on the CFPB to extend various protections afforded to debit cards under the Electronic Fund Transfer Act and Regulation E to reloadable prepaid cards.… Continue Reading