Consumer Financial Protection Bureau

Congressional Review Act Should Not Be Used on the Prepaid Card Rule or Any Other CFPB Rule

The Consumer Protection Bureau’s (CFPB) prepaid card rule provides prepaid card users with similar protections as those enjoyed by checking account consumers, easy to understand information about prepaid accounts, and credit protections.  The specific protections include requiring a simple chart of fees to help consumers shop for the right card, and limits on fees and interest charges.  These protections are important as the amount of funds put on prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012 and is expected to increase to $112 billion by 2018.

And the large player that invented the prepaid industry, Green Dot, supports the rule.  The rule will, however, result in another industry player, NetSpend losing $80 to $85 million a year in overdraft fees. It is perhaps no surprise then that the Congressional Review Act Resolution was sponsored by Senator Perdue of Georgia, and that Senator Isakson of Georgia was one of six Republican co-sponsors—NetSpend’s parent company TSYS is headquartered in Georgia.  Representative Graves of Georgia with cosponsors Reps. Loudermilk (GA) and Huizenga (MI) have also introduced a resolution in the House.

The Congressional Review Act (CRA) allows Congress to, relatively quickly, disapprove a pending rule within a certain timeframe and without filibuster.  The repeal also has the impact of barring an agency from issuing another rule in substantially the same form as the disapproved rule.

The prepaid card rule was developed over a period of more than four years and informed by an in-depth study. That is what good government looks like: policy decisions informed by research that help everyday people. Good government does not look like invalidating consumer protections that have industry support so that a company can continue to profit off of consumers as the only major prepaid card provider with overdraft fees.

But under the surface there is an even more troubling current of a general attack on the CFPB’s work to protect consumers as this resolution is only the first of many to come.  There will undoubtedly also be CRA Resolutions looking to repeal other forthcoming rules from the CFPB including protections for consumers trapped in cycles of using payday loans continuously to make ends meet, and restoring access to the court system for consumers currently forced into unfair arbitration systems.

CFA has a long history of working in coalition with other groups that have released statements detailing why this rule is of critical importance to consumers such as Consumers Union (press release) and the National Consumer Law Center (press release).

Our coalition of advocates for everyday people will continue to advocate that consumers who use prepaid cards deserve protections just like people who use traditional checking accounts.

If you also believe that’s true let the Senators and representatives sponsoring these resolutions know, especially if you live in their state: Sen. Perdue (R-GA) @sendavidperdue, Sen Cotton (R-AR) @SenTomCotton, Sen. Isakson (R-GA) @SenatorIsakson, Sen Johnson (R-WI) @SenRonJohnson, Sen. Lankford (R-OK)  @SenatorLankford, Sen. Lee (R-UT) @SenMikeLee, Sen. Rounds (R-SD)  @SenatorRounds, Sen. Enzi (R-WY) @SenatorEnzi, Rep. Graves (R-GA-14) @RepTomGraves, Rep. Loudermilk (R-GA-11) @RepLoudermilk, and Rep. Huizenga (R-MI-2) @RepHuizenga.