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CFPB Finalizes Changes to Prepaid Accounts Rule

Mon, Jan 29, 2018

The CFPB announced amendments to the agency's 2016 prepaid accounts rule on Thursday, January 25. The changes: 

  • Extend the overall effective date of the rule by one year. The effective date of the Prepaid Accounts Rule has been extended to April 1, 2019
  • Adjust error resolution requirements. The amendments revise the error resolution and limited liability provisions of the prepaid rule in Regulation E to provide that financial institutions are not required to resolve errors or limit consumers' liability on unverified prepaid accounts. For accounts where the consumer's identity is later verified, financial institutions are not required to limit liability and resolve errors with regard to disputed transactions that occurred prior to verification. 
  • Provide more flexibility concerning credit cards linked to digital wallets. The changes create a limited exception to the credit-related provisions of the prepaid rule in Regulation Z for certain business arrangements between prepaid account issuers and credit card issuers that offer traditional credit card products. 

This exception is designed to address certain complications in applying the credit provisions of the prepaid rule to credit card accounts linked to digital wallets that can store funds where the credit card accounts are already subject to Regulation Z's open-end credit card rules in circumstances that appear to pose lower risks to consumers. This final rule also expands the situations in which prepaid account issuers are permitted to run negative balances on prepaid accounts, provided certain conditions are met. 

The CFPB also finalized certain other clarifications and minor adjustments to aspects of the prepaid rule in both Regulation E and Regulation Z. More information is available at