Congress will not use the Congressional Review Act to prohibit the CFPB from issuing rules governing prepaid cards.
The deadline for the House and Senate using the law to affect the rulemaking process expired Thursday.
“When the CFPB originally released its 1,689-page rule, it was entirely too broad and would negatively impact financial products millions of consumers use every day,” said Sen. David Perdue (R-Ga.), in explaining why he didn’t push the needed congressional resolution. He went on to say, “Ultimately, the CFPB should have scrapped this rule altogether but we were able to extract significant concessions to narrow its scope.”
Congress used the law to eliminate 14 other rules that had been finalized during the closing months of the Obama Administration.
The prepaid rules, which the CFPB finalized in October, would require financial institutions issuing prepaid cards to give consumers upfront information about fees and other details, limit consumer losses when cards are lost or stolen, investigate potential errors and provide other consumer protections.
Credit union groups have argued that the rules are too broad.
The rules were scheduled to go into effect on Oct. 1, but the CFPB decided to delay the effective date until April 1, 2018. The delay, the agency said, would give industry participants more time to implement required changes and give the CFPB time to determine if it should change any provisions.
In finalizing that delay, the CFPB said that it already has identified issues that it must address before finalizing the rules. The agency said that some industry participants had said they would have trouble complying with the rules by the original Oct. 1 deadline.
In addition, the agency said that it intends to explore the linking of credit cards to digital wallets and error resolution and limitations on liability for prepaid accounts that cannot be registered, have not yet been registered or for which consumers unsuccessfully attempted to register the cards.
Consumer groups said they are pleased that ultimately, Perdue did not push his plan.
“This will be a victory for the 12 million Americans who use prepaid cards, including rural and inner city Americans who live far from a bank, workers who receive wages on payroll cards, and households who can’t get a bank account,” said Lauren Saunders, associate director of the National Consumer Law Center.”
