The Consumer Financial Protection Bureau (CFPB) recently
released rules that impose specific requirements applicable to
prepaid accounts, including prepaid cards. This edition of
Morgan Lewis Retail Did You Know?
describes the new requirements and what retailers need to do to
comply.
Background
Given the rise in consumers' use of prepaid cards, the CFPB
has spent nearly two years developing a final rule to regulate this
type of account. According to the CFPB, the amount of money that
consumers put on "general purpose reloadable" prepaid
cards grew from less than $1 billion in 2003 to almost $65 billion
in 2012 and is expected to reach $121 billion by 2018. Effective
October 1, 2017, the final rule requires (1) protections for
prepaid accounts under the Electronic Fund Transfer Act, (2)
mandatory consumer disclosures, and (3) credit protections that
arise out of the Truth in Lending Act and the Credit Card
Accountability Responsibility and Disclosure Act.
