The Consumer Financial Protection Bureau proposed further changes Thursday to its final rule on prepaid cards and is seeking public comment on whether to delay implementing it a second time.

The agency is not revisiting the entire rule, but instead is proposing adjustments on resolving errors for unregistered accounts and exclusions for traditional credit card accounts linked to prepaid accounts.

“Effective implementation helps our rules deliver their intended value to consumers,” CFPB Director Richard Cordray said in a press release. “Today’s request for comment shows we are listening closely to feedback on our rules to decide whether certain adjustments will help to achieve that goal.”

CFPB Director Richard Cordray
“Today’s request for comment shows we are listening closely to feedback on our rules," said CFPB Director Richard Cordray. Bloomberg News

In March, the CFPB proposed delaying the implementation of the final rule for six months until April 2018, in part over industry concerns.

For now, the bureau is referring to Oct. 1, 2018, as the prepaid rule's compliance date, even as it seeks public comment on whether there should be a second delay. It said it is not proposing a further extension of the rule's effective date, but is seeking comment on whether a further delay is "necessary and appropriate" in light of the changes.

Under the existing rule, financial institutions are concerned they would be on the hook for fraud losses on unregistered cards that would be tough to investigate because they have no information about the consumer.

The CFPB said in its proposal that for accounts where a consumer's identity is later verified, financial institutions "would be required to resolve errors and limit liability with regard to disputed transactions that occurred prior to verification."

Where there is no verification process, the bureau said, prepaid issuers should explain to consumers in initial disclosures the error resolution process and limitations on consumers' liability for unauthorized transfers, "or explain that there is none, and comply with the process (if any) that they disclose."

Some industry participants had asked the agency to exclude certain products such as digital wallets that can store funds or person-to-person payment products.

The CFPB is proposing an exclusion for traditional credit cards that are linked to a digital wallet prepaid account unless a consumer has submitted a written request authorizing the linking of the two accounts, depending on certain terms and conditions.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry