Bureau of Consumer Financial Protection.
Proposed rule with request for public comment.
The Bureau of Consumer Financial Protection (Bureau or CFPB) is proposing to delay the October 1, 2017 effective date of the rule governing Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) by six months, to April 1, 2018.
Comments must be received on or before April 5, 2017.
You may submit comments, identified by Docket No. CFPB–2017–0008 or RIN 3170–AA69, by any of the following methods:
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All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information.
Thomas L. Devlin or Yaritza Velez, Counsels, or Kristine M. Andreassen, Senior Counsel, Office of Regulations, at (202) 435–7700.
On October 5, 2016, the Bureau released a final rule to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act (EFTA), and Regulation Z, which implements the Truth in Lending Act (TILA) (Prepaid Accounts Final Rule).
This proposed rule seeks comment on whether the Bureau should extend the effective date of the Prepaid Accounts Final Rule, and if so, whether six months is an appropriate length of time for such an extension. The Bureau is also proposing to make conforming amendments to certain regulatory text and commentary adopted in the Prepaid Accounts Final Rule to reflect the proposed effective date delay.
In the Prepaid Accounts Final Rule, the Bureau extended Regulation E coverage to prepaid accounts and adopted provisions specific to such accounts, and generally expanded Regulation Z's coverage to overdraft credit features that may be offered in conjunction with prepaid accounts.
Upon issuing the Prepaid Accounts Final Rule, the Bureau initiated robust efforts to support industry implementation.
As published, the Prepaid Accounts Final Rule has a general effective date of October 1, 2017. As part of its efforts to support industry implementation, the Bureau has discussed implementation efforts with a number of industry participants. As a result of those discussions, the Bureau has learned that some industry participants are concerned that they will have difficulty in complying with the Prepaid Accounts Final Rule while also ensuring continued availability of their prepaid products and with minimal disruption to consumers by October 1, 2017 for a variety of reasons. For example, the Bureau put in place an exception in Regulation E § 1005.18(h)(2) pursuant to which financial institutions are not
In addition, in the course of working to implement the Prepaid Accounts Final Rule, some industry participants have raised concerns about what they describe as unanticipated complexities arising from the interaction of certain aspects of the rule with certain business models and practices (including recent changes thereto) that they did not fully address in their comment letters on the Prepaid Accounts NPRM, which may lead to additional complexities for implementation and negative implications for consumers.
The Bureau continues to believe that the Prepaid Accounts Final Rule will provide significant benefits to consumers and that, therefore, expeditious implementation remains essential to provide comprehensive consumer protections to users of prepaid accounts. The Bureau also appreciates the concerns raised by some industry participants that they may have difficulty in complying with the rule by October 1, 2017. Accordingly, for the reasons stated herein, the Bureau is proposing to delay the effective date of the Prepaid Accounts Final Rule for a period of six months, to April 1, 2018. In order to effect this change, the Bureau is also proposing to amend Regulation E §§ 1005.18(b)(2)(ix) and (h), and 1005.19(f)(1), and related commentary, to reflect the delayed effective date.
Furthermore, delaying the effective date will allow the Bureau to more closely evaluate concerns raised by industry participants regarding certain substantive aspects of the Prepaid Accounts Final Rule that they assert are posing particular complexities for implementation or may have negative consequences for consumers that were not anticipated or fully explained by commenters in response to the Prepaid Accounts NPRM, and to propose revisions to those provisions of the Prepaid Accounts Final Rule if it determines that amendments are necessary and appropriate.
The Bureau believes that, based on its initial outreach to industry, a six-month delay would be sufficient for industry participants to ensure that they can comply with the Prepaid Accounts Final Rule with minimal disruption to consumers. In particular, a six-month extension would both allow more time for package printing and allow pull-and-replace processes at retail locations to occur after the winter holiday season, which is a particularly busy time for retailers. Indeed, the Bureau understands that industry often effectuates pull-and-replace processes in the spring for precisely this reason. The Bureau also believes that a six-month delay will allow the Bureau adequate opportunity to consider possible additional amendments to the Prepaid Accounts Final Rule, and for industry to implement any such changes, without unnecessary disruption to consumers' access to, and use of, prepaid accounts.
The Bureau solicits comment on whether it should delay the effective date for the Prepaid Accounts Final Rule, and if so, whether six months is an appropriate length of time. The Bureau also solicits comment on the potential consequences of not extending the effective date. In particular, the Bureau asks commenters to provide specific detail and any available data regarding current and planned practices, as well as relevant knowledge and specific facts about any benefits, costs, or other impacts of this proposal on industry, consumers, and other stakeholders. Finally, the Bureau solicits comment about the impact of the proposed delay on consumers who use prepaid accounts.
The Bureau is not proposing to delay the effective date of the requirement to submit prepaid account agreements to the Bureau in Regulation E § 1005.19(f)(2), which is October 1, 2018. The Bureau expects to have its agreement submission process in place by October 1, 2018, and the Bureau's outreach has not indicated that industry participants are concerned that they will not be able to meet the agreement submission effective date. The Bureau nonetheless solicits comment on whether it should delay the effective date of the agreement submission requirement, and if so, for what length of time.
The Bureau is not proposing to amend any substantive requirements of the Prepaid Accounts Final Rule at this time. The purpose of this notice is not to seek comment generally on policy decisions made in the Prepaid Accounts Final Rule that industry or other stakeholders might wish the Bureau to reconsider. The Bureau will continue its outreach to industry and other stakeholders to understand their experiences in implementing the Prepaid Accounts Final Rule. If the Bureau determines that amendments to the substantive provisions of the Prepaid Accounts Final Rule are warranted, it will do so through a separate rulemaking.
The Bureau is proposing to exercise its rulemaking authority pursuant to EFTA section 904(a) and (c), Dodd-Frank Act sections 1022(b)(1) and 1032(a), and TILA section 105(a) to delay the effective date of the Prepaid Accounts Final Rule.
The legal authority for the Prepaid Accounts Final Rule is described in detail in the Prepaid Accounts Final Rule's
Regulation E § 1005.18(b)(2) describes the short form disclosure requirements for prepaid accounts. Section 1005.18(b)(2)(ix) contains requirements specifically regarding additional fee types. Section 1005.18(b)(2)(ix)(D) describes the timing requirements for the initial assessment of an additional fee types disclosure, and § 1005.18(b)(2)(ix)(E) describes the timing for the periodic reassessment and update of additional fee types disclosures. The Bureau is proposing to revise the dates in the regulatory text and headings in § 1005.18(b)(2)(ix)(D)(
Regulation E § 1005.18(h) sets forth several provisions to make clearer the Prepaid Accounts Final Rule's general October 1, 2017 effective date. The Bureau is proposing to revise the dates in the regulatory text and headings throughout § 1005.18(h) and in comments 18(h)–1, 2, 6.i and 6.ii to reflect the proposed revised effective date of April 1, 2018.
Regulation E § 1005.19(f)(1) sets forth the general effective date for the prepaid account agreement posting requirements in § 1005.19, other than the delayed requirement to submit prepaid account agreements to the Bureau pursuant to § 1005.19(b), as addressed in § 1005.19(f)(2). The Bureau is proposing to revise the date in the regulatory text of § 1005.19(f)(1) to reflect the proposed revised effective date of April 1, 2018. As discussed above, the Bureau is not proposing to delay the October 1, 2018 date for submission of agreements to the Bureau.
The Bureau is proposing to delay the effective date of the Prepaid Accounts Final Rule by six months, to April 1, 2018. Additionally, the Bureau is proposing to make conforming amendments to Regulation E §§ 1005.18(b)(2)(ix) and (h), and 1005.19(f)(1), and related commentary. After considering comments received on the proposal, the Bureau will publish a final rule with respect to the effective date of the Prepaid Accounts Final Rule. The Bureau proposes that the final rule with respect to the effective date of the Prepaid Accounts Final Rule will become effective 30 days after publication in the
In developing the proposed rule, the Bureau has considered the potential benefits, costs and impacts required by section 1022(b)(2) of the Dodd-Frank Act. Specifically, section 1022(b)(2) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of consumer access to consumer financial products or services, the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act, and the impact on consumers in rural areas. In addition, 12 U.S.C. 5512(b)(2)(B) directs the Bureau to consult, before and during the rulemaking, with appropriate prudential regulators or other Federal agencies, regarding consistency with the objectives those agencies administer. The Bureau consulted, or offered to consult with, the prudential regulators, the Department of the Treasury, the Securities and Exchange Commission, and the Federal Trade Commission regarding consistency with any prudential, market, or systemic objectives administered by these agencies.
The Bureau previously considered the costs, benefits, and impacts of the Prepaid Accounts Final Rule's major provisions.
The Bureau requests comment on this discussion as well as submission of additional information that could inform the Bureau's consideration of the potential benefits, costs, and impacts of this proposed rule.
The Regulatory Flexibility Act
The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule would not have a significant economic impact on a substantial number of small entities.
In the Prepaid Accounts NPRM, the Bureau concluded that the rule would not have a significant economic impact on a substantial number of small entities and that an IRFA was therefore not required.
As discussed above, the proposal would delay the effective date of the Prepaid Accounts Final Rule to April 1, 2018. The proposed six-month delay in the effective date would benefit small entities by providing additional flexibility with respect to the timing of the Prepaid Accounts Final Rule's implementation. In addition to generally providing increased flexibility, the delay in the effective date would permit small entities to delay the commencement of any ongoing costs that result from complying with the Prepaid Accounts Final Rule. Because small entities retain the option of complying with the Prepaid Accounts Final Rule's original effective date, the proposed rule's delay of the effective date will not increase costs incurred by small entities relative to the baseline established by the Prepaid Accounts Final Rule. Accordingly, the undersigned hereby certifies that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities.
Under the Paperwork Reduction Act of 1995
The Bureau has determined that this proposed rule would not have any new or revised information collection requirements (recordkeeping, reporting, or disclosure requirements) on covered entities or members of the public that would constitute collections of information requiring OMB approval under the PRA. The Bureau welcomes comments on this determination or any other aspects of this proposal for purposes of the PRA. Comments should be submitted to the Bureau as instructed in the