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.”… Continue Reading

The CFPB has released the Spring 2022 edition of its Supervisory Highlights.  The report discusses the Bureau’s examinations in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, prepaid accounts, remittance transfers, and student loan servicing that were completed between July 2021 and December 2021. … Continue Reading

In filings submitted last week, the Consumer Financial Protection Bureau (the Bureau) both opposed and moved for summary judgment in PayPal, Inc. v. Consumer Financial Protection Bureau, asking the court to put an end to PayPal, Inc.’s lawsuit challenging the prepaid card rule (Rule), which took effect last year. The Rule set out certain fee disclosure requirements, credit-linking restrictions, and other consumer protections for “prepaid accounts.”… Continue Reading

The CFPB has published its Spring 2020 rulemaking agenda as part of the Spring 2020 Unified Agenda of Federal Regulatory and Deregulatory Actions.  It represents the CFPB’s third rulemaking agenda under Director Kraninger’s leadership.  The agenda’s preamble indicates that the information in the agenda is current as of March 5, 2020 and identifies the regulatory matters that the Bureau “reasonably anticipates having under consideration during the period from May 1, 2020 to April 30, 2021.”… Continue Reading

PayPal has filed a motion for summary judgment in its lawsuit against the CFPB seeking to invalidate the Bureau’s prepaid card rule (“Rule”).  The Rule became effective on April 1, 2019.  The relief sought by PayPal in the lawsuit, which was filed in December 2019 in the D.C. federal district court, includes vacating the Rule and enjoining the Bureau from enforcing the Rule.… Continue Reading

The Montana Supreme Court, in Bratton v. Sisters of Charity of Leavenworth Health System, Inc., has ruled that a health care provider’s use of prepaid cards to make refunds to patients did not violate Montana law.

In the lawsuit, the plaintiff alleged that SCL Health (SCL), her healthcare provider, violated Montana law by directing its bank to issue two prepaid cards to the plaintiff to refund credit balances on her account with SCL. … Continue Reading

The CFPB has issued an interpretive rule addressing the application of the Electronic Fund Transfer Act/Regulation E compulsory use prohibition to COVID-19 relief payments made by federal, state, or local government agencies.

The prohibition makes it unlawful for any person to require a consumer to establish an account for the receipt of electronic funds with a particular financial institution as a condition of employment or receipt of a government benefit.… Continue Reading

PayPal filed a lawsuit against the CFPB last week in the D.C. federal district court seeking to invalidate the Bureau’s prepaid card rule (“Rule”).  The Rule became effective on April 1 of this year.

PayPal’s primary consumer offering is a “digital wallet.”  A digital wallet is primarily used by a consumer to access his or her traditional payment devices (Funding Instruments), such as credit cards, debit cards, and checking accounts in order to allow the consumer to make electronic peer-to-peer transfers of funds or to purchase products from third-party merchants.… Continue Reading

Last week, the defendant filed its answer brief in Bratton v. Sisters of Charity of Leavenworth Health System, Inc., an appeal now pending before the Montana Supreme Court involving a challenge to the defendant’s use of prepaid cards to make refunds to the plaintiff.  In addition, the Montana Bankers Association, the American Bankers Association, and the Consumer Bankers Association filed an amicus brief in support of the defendant.… Continue Reading

The CFPB’s final rule on prepaid accounts, which became effective on April 1, 2019, requires issuers of prepaid accounts, with certain exceptions, to submit to the CFPB all account agreements that the issuer offers, amends, or withdraws.  The deadline for the initial submissions was May 1, 2019.  (In February 2019, the CFPB released guidance and technical specifications relating to the submission of such agreements.)… Continue Reading