CFPB Updates Prepaid Rule Small Entity Compliance Guide and Guide to Preparing the Short Form Disclosure for Prepaid Accounts

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The CFPB updated its Prepaid Rule Small Entity Compliance Guide and the Guide to Preparing the Short Form Disclosure for Prepaid Accounts to reflect changes made to the Prepaid Rule earlier this year.  The recent amendments to the Rule modified and clarified certain provisions of Regulation E, which implements the Electronic Fund Transfer Act, and Regulation Z, which implements the Truth in Lending Act, related to prepaid accounts.

The Small Entity Compliance Guide was updated to address various changes and clarifications set out in the recent amendments to the Prepaid Rule, including the following:

  • The extension of the Rule’s effective date to April 1, 2019;
  • Certain administrative changes;
  • The scope of the exclusion for certain types of cards (loyalty, award, and promotional) from the definition of “prepaid account”;
  • Various issues related to the form, content, timing, and delivery of certain disclosures, and exceptions from certain disclosure requirements;
  • Requirements related to initial disclosures and limitations on liability and error resolution for prepaid accounts that may be acquired before verification of a consumer’s identity is successfully completed or that are in programs that do not have a consumer identification and verification process;
  • The issuance of an unsolicited access device in certain circumstances;
  • Requirements related to the form, content, timing, and delivery of certain submissions of prepaid account agreements to the CFPB; and
  • Certain exceptions from requirements related to hybrid prepaid-credit cards and separate credit features.

The Guide to Preparing the Short Form Disclosure for Prepaid Accounts was also updated to include references to the updated Small Entity Compliance Guide and the amended regulations.  It provides basic instructions on how to prepare short form disclosures for prepaid accounts other than government benefit accounts or payroll card accounts.  The guide is based on Regulation E’s Model Form A-10(c); however, it is not a substitute for reviewing the Prepaid Rule itself.

The CFPB’s Prepaid Rule Small Entity Compliance Guide is available here, and the Guide to Preparing the Short Form Disclosure for Prepaid Accounts is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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