Last week, 16 Democratic Senators sent a letter on regulation of payroll cards to Consumer Financial Protection Bureau (“CFPB”) Director Richard Cordray and Department of Labor (“DOL”) Acting Secretary Seth Harris. The letter urges the CFPB to clarify through rulemaking or guidance the types of federal requirements with which employers must comply when offering payroll cards. Since the current Electronic Fund Transfer Act (“EFTA”) and its implementing Regulation E already contain requirements for payroll cards that apply to the bank partners of employers who use such cards, any future rulemaking or guidance will likely clarify or add to these requirements.

OVERVIEW OF THE LETTER -

The Senate letter focuses on three perceived problematic issues with payroll cards: employer-mandated use of payroll cards, fees associated with card usage and coercive tactics by employers to encourage card acceptance. To address these perceived issues, the letter requests that the CFPB issue guidance or conduct additional rulemaking to clarify how the EFTA and Regulation E apply to payroll cards. The Senators also urge the CFPB to bring enforcement actions “[w]here systematic abuses are clear.”