CFPB pushes back GPR card rules proposal date

According to the Consumer Financial Protection Bureau's rulemaking agenda, the proposed rules designed to regulate the general purpose reloadable (GPR) prepaid card sector will not be released until May 2014. Previously, the prepaid card industry expected the CFPB to issue its proposal on how it expects to regulate GPR cards by the end of 2013.

Industry analysts speculate that the delay may be an admission by the CFPB that its rulemaking timeline was too aggressive and that it needed more time to develop a rules framework that takes industry concerns into consideration. Industry advocates, such as the Network Branded Prepaid Card Association and the National Association of Federal Credit Unions, have expressed concern that too stringent regulations would stifle the still growing GPR card sector.

In July 2012, the NBPCA urged the CFPB “not to enact overly burdensome legislation, which limits consumer access to these popular financial tools. GPR cards are available in more than 200,000 retail locations, banks and other locations convenient to consumers in all neighborhoods, including areas not serviced by traditional banks.”

The NBPCA supported federal consumer protections afforded payroll cardholders be extended to GPR cardholders, as well as fee disclosure requirements. But NBPCA President and Executive Director Kirsten Trusko said that a clear majority of GPR cardholders are already satisfied with the consumer protections on their cards.

Also in July 2012, the NAFCU advised the CFPB do nothing, since financial services firms were still trying to figure out how to comply with the mandates of the Dodd-Frank Act of 2010, and namely the Durbin Amendment which placed price controls on debit card interchange. The NAFCU said credit unions did not need more regulatory burdens placed on them to reconfigure their prepaid card programs as well.

"Given the substantial amount of time, energy and resources that will be required to comply with the numerous statutorily mandated provisions in the Dodd-Frank Act, the CFPB should attempt to minimize the regulatory burden on small financial institutions such as credit unions," the association noted.

Meanwhile, the Electronic Transactions Association weighed in on the subject. The ETA recommended that the CFPB:

• Avoid regulation that would increase the cost to consumers for using GPR cards
• Support full, clear and standardized fee disclosures associated with each card
• Seek comments from industry stakeholders about how they would implement new regulations

Editorial Note:

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