CFPB Finalizes New Rules Governing Prepaid Card Products

On Oct. 5, 2016, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray announced a final rule governing the burgeoning consumer prepaid card industry. The CFPB estimates that the amount of money consumers load onto "general purpose reloadable" prepaid cards increased from less than $1 billion in 2003 to nearly $65 billion in 2012. The scope of the new rule reaches not only traditional prepaid cards, but also mobile wallets, person-to-person payment products and other electronic accounts that store funds (e.g., PayPal). The rules will go into effect Oct. 1, 2017, creating uniform standards across the industry.

In general, the new prepaid card rules impose three requirements: First, they limit consumer losses when funds are stolen or cards are lost; second, they require institutions to investigate and resolve errors; and third, they must give consumers "easy and free access" to their account information. The CFPB also finalized "Know Before You Owe"