DC Circuit Holds CFPB Did Not Exceed Statutory Authority With The Prepaid Rule

On February 3, 2023, the U.S. Court of Appeals for the District of Columbia Circuit (DC Circuit) issued a decision regarding the disclosure requirements of the Consumer Financial Protection Bureau's (CFPB) Prepaid Rule. In PayPal, Inc. v. CFPB, No. 21-5057 (D.C. Cir. 2023) (PayPal), a unanimous panel of the DC Circuit held that the Prepaid Rule does not violate the Electronic Fund Transfer Act (EFTA) because the Rule only provided modeled or suggested language for its disclosure requirements, as opposed to mandatory terminology, and because the Rule's mandatory formatting for disclosures was not prohibited by the EFTA.

The Electronic Fund Transfer Act (EFTA) requires that "the terms and conditions of electronic fund transfers involving a consumer's account shall be disclosed at the time the consumer contracts for an electronic fund transfer service" and that these disclosures be in "readily understandable language." 15 U.S.C. § 1693c(a). The EFTA also