Page 16 - GS180101

Views

"The Bureau expects to issue a final rule amending certain
Insider’sreport aspects of its 2016 rule governing prepaid accounts soon
after the new year," the CFPB wrote. "As part of that process,
on payments: the Bureau expects, based on its review of the comments
received [to previous requests], to further extend the
effective date of the 2016 rule to allow additional time for
implementation of the final rule."
More changes coming?

CFPB back-peddles Opponents of the prepaid card rule were quick to praise the
CFPB's statement. "We thank the CFPB for acknowledging
the challenges with implementing the rule and we applaud
on prepaid rule the Bureau for allowing additional time to comply," the
Electronic Transactions Association said in a statement. In a
letter to the CFPB earlier in the year, the ETA had requested

By Patti Murphy an extension of the effective date to April 2019; it also urged
reconsideration of the pending overdraft restrictions.
ProScribes Inc.
While industry opposition to aspects of the prepaid rule
repaid debit card companies will get more time clearly played a role in the CFPB's back peddling, it wasn't
to comply with new federal regulations, as well the only determining factor. The CFPB – a product of
as a possible reprieve on some provisions of the the 2010 Dodd-Frank Wall Street Reform and Consumer
P pending Consumer Financial Protection Bureau Protection Act – has been embroiled in controversy since its
rules. In October 2016, the bureau issued a controversial inception. Several bills have been introduced in Congress to
set of rules that extended to prepaid debit accounts many scale back CFPB regulatory powers; there was even a failed
consumer protections that now apply to credit and debit attempt to legislate the prepaid rules out of existence. And
cards products. The rules cover a broad spectrum of pre- there have been court challenges to how the CFPB was set
paid products beyond branded prepaid cards, including up: with no direct and ongoing accountability to Congress
tax-refund and government assistance cards, student aid or the President.
financial disbursement cards, person-to-person payment
systems and mobile wallets. New leadership

One controversial provision imposes a 30-day waiting Then in November, CFPB Director Richard Cordray an-
period before a consumer can link a prepaid debit card to nounced his resignation, prompting President Trump to
appoint Mick Mulvaney as interim director. Mulvaney, a
a mobile wallet. Another requires provisional re-crediting
of cardholder accounts for disputed transactions that staunch critic of the CFPB, had been Director of the Office of
Management and Budget. While Mulvaney's appointment
cannot be resolved within 10 days. But perhaps the most
controversial provisions were those subjecting overdraft has been challenged – Cordray had appointed his chief of
staff, Leandra English, as acting chief, and she is now suing
features offered with some prepaid debit cards to federal
regulations that govern other extensions of credit, thereby to have Mulvaney's appointment struck down – he's been
actively placing his mark on the CFPB. In addition to delay-
requiring prepaid card issuers to assess cardholder
creditworthiness and their ability to repay prior to offering ing the prepaid card rule, Mulvaney also revealed plans
to reconsider pending home mortgage disclosure reporting
overdraft protections.
rules. Perhaps even more telling, the Mulvaney-led bureau
Mounting pressure has rewritten its mission statement.
Bowing to industry pressure, the CFPB revealed in March The new statement reads, in part, "The Consumer Financial
2017 that it would extend the implementation date for the Protection Bureau is a 21st century agency that helps con-
new rules to April 2018, stating providers needed more sumer finance markets work by regularly identifying and
time to make required changes to systems, processes and addressing outdated, unnecessary or unduly burdensome
forms. The consumer watchdog also requested comments regulations." Under Cordray the CFPB had described itself
on additional implementation challenges the rules pose, as "a 21st century agency that helps consumer finance mar-
suggesting it might be willing to tweak its final rule. kets work by making rules more effective, by consistently
and fairly enforcing those rules."
Then on Dec. 21, 2017, just as most Washington insiders were
preparing to leave for the long holiday weekend, the CFPB
issued a statement indicating the deadline for compliance Patti Murphy is Senior Editor of The Green Sheet and President of
will be extended further and hinting additional changes to ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email
the final rule may be in the offing. her a patti@greensheet.com..

16