US Consumer Financial Protection Bureau Issues Final Rule To Protect Prepaid Account Users

 On October 5, 2016, the CFPB issued a final rule that applies federal consumer protections under Regulations E and Z for prepaid account users for the first time. Prepaid accounts may be loaded with funds by a consumer or by a third party, such as an employer. Consumers generally can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits or send money to others.

Specifically, the rule requires financial institutions to: (i) limit consumers' losses when funds are stolen or cards are lost; (ii) investigate and resolve errors; and (iii) give consumers free and easy access to account information. The CFPB also finalized new "Know Before You Owe" disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. Finally, under the new rule, prepaid companies must generally offer protections similar to those for credit cards if consumers are allowed to use credit in their accounts to