image description

Frosh Opines On Three Congressional Consumer Protection Resolutions

April 5th, 2017 by WCBC Radio

Maryland Attorney General Brian E. Frosh, in conjunction with the Attorneys General from 16 other states and the District of Columbia have sent a letter to Congressional leadership urging them not to support three resolutions (S.J. Res.19, H.J Res. 62 and H.J. Res. 73), any of which would derail a Final Rule announced by the Consumer Financial Protection Bureau (“CFPB”), which would protect the millions of consumers who use prepaid cards.  The rule was first considered by the CFPB in May 2012 and is scheduled to go into effect on April 1, 2018.

Prepaid cards are a rapidly growing market and are often used by consumers who have limited or no access to a traditional bank account.  Today, more consumers receive their wages by prepaid cards than by paper checks. Consumers frequently incur hidden or undisclosed fees, even when the cards are used to receive their salaries or student loans. Some of these cards even subject consumers to overdraft fees. 

The CFPB’s Final Rule provides a common sense approach to regulating this important product, providing protections that consumers have come to expect in similar financial products. Among its key provisions protecting consumers, the Final Rule will:

  • Protect prepaid card users against fraud and unauthorized charges;
  • Help consumers avoid hidden fees;
  • Enable consumers to comparison shop with a simple chart of common fees;
  • Provide convenient, free access to account transactions and account balances;
  • Require employers to inform employees they are not required to receive wages on a payroll card; and
  • Require prepaid credit cards to comply with existing credit card laws (including an ability to pay analysis, limits on overdraft fees in the first year, and safeguards on how funds are repaid).

“The CFPB Rule provides important, common-sense protections for consumers,” said Attorney General Frosh. “Just as credit cards are subject to laws that safeguard consumers, prepaid cards should be subject to the same or similar laws.”

Parts of the rule are supported by both industry and consumer groups. The resolutions to stop implementation of the CFPB’s Final Rule have been filed under the Congressional Review Act and, if the rule is blocked by a CRA vote, the CFPB is forever barred from enacting a substantially similar rule unless Congress authorizes it.  Attorney General Frosh and his colleagues are calling on Congress to leave the CFPB’s Rule in place so that this growing marketplace can thrive while also protecting consumers.

In addition to Attorney General Frosh, the letter was signed by the Attorneys General for the District of Columbia, California, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, Mississippi, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington State. A copy of the full letter to Congressional leaders can be found here.

Leave a Reply

 



View Mobile Site