Consumer bureau delays prepaid card rule until April 2019

The Consumer Financial Protection Bureau (CFPB) on Thursday delayed its rule on prepaid cards and debit accounts for a year while also announcing changes to the rule.

The CFPB pushed the effective date of the regulation forward to April 1, 2019, a year later than it was originally intended to begin. The bureau also made changes meant to boost compliance with the rule and loosen rules on linking credit cards to prepaid accounts or “virtual wallets.”

The announcement is the latest in acting CFPB Director Mick Mulvaney’s expanding effort to reshape the bureau and its regulatory legacy.

Mulvaney announced in December that the CFPB would reopen its rules on prepaid accounts and mortgage servicing, the first regulatory targets of his effort to rein in the bureau. The yearlong delay to the prepaid card rule will give Mulvaney, the new political aides he brought in and his successor time to make drastic revisions.

The prepaid card rule, first proposed in 2012 and finalized in 2016, aims to protect consumers from landing into deep debt using prepaid cards and accounts. The rule aims to ensure consumers have the ability to repay any debts before being offered credit and make sure they’re aware of all potential fees. It also bars companies from using overdraft services without consumer consent and mandates they follow the same debt disclosure rules applied to credit cards.

The bureau made few major changes to the rule beyond the yearlong extension, with some reflecting amendments proposed under former Director Richard Cordray, a Democrat. Such changes include forcing a prepaid card user to register it with the issuing company before making a theft or fraud complaint and giving consumers more flexibility to link prepaid cards to credit cards

Further changes are likely to be more drastic and in line with Mulvaney’s stated goal to make the CFPB more receptive to desires of the businesses it regulates.

“The days of aggressively ‘pushing the envelope’ of the law in the name of ‘mission’ are over,” Mulvaney wrote in a Tuesday memo to CFPB employees.

“We don’t just work for the government, we work for the people,” wrote Mulvaney. “Those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them.”