ABC Cash Advance

ABC's to getting a cash advance

Archives

The CFPB Issues Proposed Rules for Prepaid Financial Products

Back in mid-November the CFPB (Consumer Financial Protection Bureau) issued their proposed rules to offer certain protections under the existing Electronic Funds Transfer Act’s implementing of Regulation E and the Truth in Lending Act’s implementing Regulation Z to certain prepaid financial products. The CFPB also released the results of a study they conducted on the prepaid financial service industry. The rule that is being proposed by the CFPB defines prepaid accounts as a code, card or other device which is given for individual, households or family purposes and which also is issued on a prepaid basis to customers in specified amounts or not issued on a prepaid basis but with the potential of being loaded with funds at a later date; and that is redeemable upon presentation at merchant locations for goods or services, able to be used at ATMs or for person-to-person financial transfers. Prepaid accounts would also include payroll card accounts (given by some employers in lieu of actual pay checks or direct deposits to checking accounts) and government benefit accounts. However, prepaid accounts would not include store gift cards, gift certificates, promotional or loyalty card benefits or general use prepaid cards that are clearly labeled or marketed as gift certificates or gift cards. Regulation E Extended Under this proposed rule, Regulation E’s current definition of an account would include prepaid accounts and these protections would be extended to consumers that receive such prepaid financial products: Periodic account statements or the ability to access account information for free online. Limited liability for any unauthorized charges if the consumer promptly notifies their financial institution of any unauthorized charges that have taken place. Timely investigations and resolutions with regard to any errors that are reported. The Know Before You Owe Clause The new rule also includes the “Know Before You Owe” disclosures for prepaid accounts. Financial institutions that offer these types of financial products to consumers would be required to provide short and long form disclosures to consumers before a prepaid account of any type is acquired. And for some types of prepaid products that are sold in retail stores,… Read More