WASHINGTON, D.C. – A Congressional Review Act (CRA) resolution to repeal a new consumer protection rule on prepaid cards is not set to advance in the Senate ahead of a deadline, nixing the measure’s chances of getting a vote by the full chamber. The prepaid card rule was finalized by the Consumer Financial Protection Bureau (CFPB) last October. The rule includes many commonsense protections for prepaid users, such as standard fraud and disclosure provisions of the Electronic Funds Transfer Act. These protections apply to error resolutions, lost cards, and unauthorized transactions, and the rule finalizes new "Know Before You Owe" disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. The rule is especially important for low-income families, many of whom have no bank account and use prepaid cards to manage their household finances. The decision to let the rule stand is a victory for consumers.
CRA is a legislative tool that allows lawmakers to undo federal regulation with a simple majority vote in both the House and Senate, followed by the President’s signature. If a CRA resolution is successful, it would bar any federal agency from issuing a rule that is similar to the rule repealed by the CRA. In this case, had the CRA resolution been brought up for a vote and passed, it would have prohibited any federal agency—like the CFPB—from issuing future rules to protect prepaid card users.
Center for Responsible Lending (CRL) Director of Federal Advocacy Scott Astrada released the following statement:
This is welcome news for consumers across the country. Rescinding this important protection would have left consumers at risk for abuse by bad prepaid card practices, including charging fees just for checking their account balance and denying customers access to their own money. It also would have left prepaid card users with limited options for managing their personal finances, especially consumers who cannot access or afford the fees associated with a bank account or choose prepaid cards in order to carefully manage their money. The rule for prepaid cards went through extensive development and marked significant progress in consumer protection that bring this product closer to credit card and debit card protection standards.
The effort to preserve this rule would not have been possible without the support of consumer advocates, civil rights organizations, faith leaders, and state organizations and partners who organized at the local level and urged their senators to keep this essential consumer protection intact. Those same voices will also be important as the House of Representatives moves forward to consider the Wrong CHOICE Act, a bill that would remove vital consumer protections implemented in response to the financial crisis of 2008. As we move forward, CRL will continue to work with its allies, state governments, and Congress in order to support financial reforms that put working families first and stop wrong-headed efforts like the Wrong CHOICE Act that harm consumers and put our financial system at risk.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.