Executive Summary

• &nbspThe Consumer Financial Protection Bureau (CFPB) recently issued a proposed rule that applies to prepaid accounts (including general purpose reloadable cards as well as other types of prepaid accounts such as digital wallets) that are offered to consumers. Prepaid products are amongst the fastest growing types of consumer financial products in the U.S.; the total dollar value loaded onto general purpose reloadable cards is expected to grow to nearly $100 billion through 2014. The CFPB also included a relatedblog post and press release.

• &nbspSpecifically, the proposed rule would extend to prepaid accounts many consumer protections under Regulation E, as well as protections under Regulation Z for prepaid accounts that offer credit options.

• &nbspThe proposal would also amend provisions of DOD’s rule regarding the manner in which a creditor can assess whether a consumer is a “covered borrower.”

• &nbspCUNA has a variety of concerns about the impact of the proposal on these financial products now and into the future, such as treating overdraft coverage on prepaid cards as loans. While only a limited number of credit unions directly offer prepaid cards as issuers, we will be working with the CUNA Consumer Protection Subcommittee, the CUNA Payments Subcommittee, and CUNA Council members to identify all concerns and develop recommendations to improve various provisions in the proposal. In 2012, CUNA submitted a comment letter to the CFPB on its advance notice of proposed rulemaking on prepaid products outlining concerns from credit unions.

• &nbspClick here for CUNA's detailed summary.

• &nbspIf you have any questions or comments, please contact CUNA Senior Assistant General Counsel Luke Martone at lmartone@cuna.com.

Questions to Consider Regarding the Proposed Rule

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* 1. Does your credit union generally support the CFPB’s proposed consumer protections on prepaid accounts and cards?

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* 2. Is your credit union currently a prepaid card issuer or does your credit union currently rely on a third-party provider/white-label program to offer prepaid cards to your members? If your credit union is relying on a third-party, please describe any potential impacts to your credit union.

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* 3. On the proposed consumer protections under Regulation E, do you have any comments regarding consumer access to account information, temporary crediting of the disputed amount to the consumers if the financial institution is not able to complete the investigation of an alleged error within 10 business days (i.e., provisional credit), and fraud and lost card protections?

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* 4. Under the proposal, financial institutions have the option of providing periodic statements with information on prepaid accounts or, alternatively, making relevant account information readily available to the consumer. Do you support this aspect of the proposal? Are there any additional alternative methods that the CFPB should consider?

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* 5. Does your credit union support the proposed model disclosures, including the long and short forms? Do you have concerns with the annual reassessment of “incidence-based” fees and reprinting disclosures on an annual basis? Do you have any recommended changes?

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* 6. Also, do you have comments regarding the proposed posting of the prepaid account agreements online and submission to the CFPB for posting on its website?

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* 7. Do you have any comments regarding the application of Regulation Z to prepaid accounts that offer credit? Do you have any broader concerns about the CFPB’s treatment of overdraft as credit under Regulation Z?

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* 8. Further, do you support the proposed disclosures regarding whether a prepaid account offers share or deposit insurance?

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* 9. Would the proposed effective date of nine months after the publication of the agency’s final rule provide sufficient time for your credit union to comply with the rule on new prepaid account materials, or information delivered online or by telephone? Would 12 months after publication provide sufficient time for all prepaid materials to be in compliance regardless of when the materials were created?

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* 10. Any other comments or questions.

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* 11. (Optional) What is your credit union's asset size?

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* 12. (Optional) Please provide information about yourself and your credit union.

Thank you for your input and time - CUNA Regulatory Advocacy Team
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