CFPB paves way for consumers to get stimulus funds via prepaid cards
The Consumer Financial Protection Bureau wants to make it easier for consumers who lack bank accounts to use prepaid cards to receive their pandemic relief stimulus payments authorized by Congress.
The CFPB issued an interpretive rule Monday that states it will not classify such payments as “government benefits.” The move is intended to get around restrictions in the Electronic Fund Transfer Act and Regulation E on dispensing the stimulus relief through a prepaid option.
The Coronavirus Aid, Relief, and Economic Security Act provides individuals $1,200 if they have under $75,000 in income, or $2,400 for couples with less than $150,000 in income based on 2019 tax return information.
“In these unprecedented times, policymakers are acting swiftly to provide consumers with needed financial support through new mechanisms and for new purposes outside of existing government benefit programs,” CFPB Director Kathy Kraninger said in a press release “The steps we are taking today ensure that consumers can receive these payments in a fast, secure, and efficient manner.”
Government agencies are prohibited by the EFTA and Reg E from requiring that consumers establish an account with a financial institution for the direct deposit of electronic fund transfers as a condition for receiving government benefits.
To facilitate faster payments, the CFPB said that government benefits do not include payments from federal, state or local governments if those payments are made to provide assistance to consumers in response to the COVID-19 pandemic; are not part of an already-established government benefit program; are made on a one-time or otherwise limited basis; and are distributed without a general requirement that consumers apply to the agency to receive funds.