On March 9, 2017, the CFPB released a proposal to delay the effective date for certain provisions of the prepaid accounts final rule for six months, from October 1, 2017, to April 1, 2018.  In its proposal, the CFPB indicated that the proposed extension was prompted by industry concerns about constraints on the ability to pull and replace prepaid card products and related packaging materials with non-compliant disclosures from retail locations before the effective date.  Comments on the proposal to delay the effective date are due 21 days after the proposal is published in the Federal Register.

The CFPB noted that a delayed effective date also would give it the opportunity to evaluate certain substantive aspects of the prepaid accounts final rule that were not anticipated or fully explained during the comment period.  Although the CFPB is not proposing any substantive amendments to the prepaid accounts final rule, the CFPB explained that the delay in the effective date would allow it “to assess whether any additional adjustments to the Rule are appropriate” and issue any proposed revisions it finds necessary and appropriate.  If the CFPB determines that further adjustments are necessary, it will issue a separate proposal.The CFPB’s proposal to delay the effective date of the prepaid accounts final rule and the suggestion that the Bureau may consider amending substantive provisions of the rule is particularly interesting in light of developments under the Congressional Review Act.  On February 1, 2017, Senator David Perdue (R-GA), along with six co-sponsors, introduced a joint resolution to nullify the prepaid accounts final rule under the Congressional Review Act.  The Congressional Review Act provides that a final agency rule may be nullified by a joint resolution of disapproval passed by Congress within 60 legislative days of the final rule’s publication, unless the President vetoes the joint resolution.  Joint resolutions of disapproval under the Congressional Review Act cannot be filibustered if they meet certain criteria.  The CFPB’s response to industry concerns by delaying the effective date of the prepaid accounts final rule may reflect an effort by the CFPB to diminish industry support for nullification of the final rule.  Additionally, the CFPB’s statement about proposing substantive amendments to the prepaid accounts final rule may signal that the CFPB stands ready to take further action, including withdrawing and re-proposing the prepaid accounts rule, to avoid the rule’s nullification under the Congressional Review Act since nullification would preclude the issuance of a substantially similar rule in the future.

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Photo of David Stein David Stein

David Stein advises clients on credit reporting, financial privacy, financial technology, payments, retail financial services, and fair lending issues. He assists a broad range of financial services firms, consumer reporting agencies, financial technology companies, and their vendors with regulatory, compliance, supervision, enforcement, and…

David Stein advises clients on credit reporting, financial privacy, financial technology, payments, retail financial services, and fair lending issues. He assists a broad range of financial services firms, consumer reporting agencies, financial technology companies, and their vendors with regulatory, compliance, supervision, enforcement, and transactional matters.

Mr. Stein has significant experience advising clients on compliance with the FCRA, GLBA, ECOA, EFTA, E-Sign Act, TILA, TISA, FDCPA, Dodd-Frank Wall Street Reform and Consumer Protection Act, and FTC Act, as well as state financial privacy laws. Mr. Stein is a member of the firm’s fintech and artificial intelligence initiatives and works with clients on issues related to cutting edge technologies, such as blockchain, virtual currencies, big data and data analytics, artificial intelligence, online lending, and payments technology.

Mr. Stein previously served in senior regulatory, policy-making, and management positions at the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve Board (FRB). He played a significant role in developing regulations and policy on credit reporting, financial privacy, retail payments systems, consumer credit, fair lending, overdraft services, debit interchange, unfair or deceptive acts or practices, and mortgage origination and servicing. Mr. Stein draws upon his government experience in representing clients before the CFPB, the FRB, and other regulatory agencies and leverages his insights into the regulatory process to provide clients with practical, actionable advice.