Send The Prepaid Card Rule To The Shredder


By:  Sen. David Perdue and Rep. Roger Williams

Before the Obama Administration turned over the keys to President Donald Trump, agency regulators used and abused their rulemaking authority to dole out hundreds of new federal government rules. So it wasn’t surprising when a rogue government agency, spawned from the 2,300-page Dodd-Frank Act, followed suit.

Last October, the Consumer Financial Protection Bureau, or CFPB, issued its 1,689-page Prepaid Card Rule. It is a sweeping rule that would upend an entire sector of our economy, stifle innovation, and deprive consumers of access to credit.

Through the Congressional Review Act, we’ve led the charge against this rule in the House and Senate. The regulators have noticed. Last week, the CFPB caved and threw a Hail Mary, announcing a delay in the implementation timeline.

For consumers and businesses alike, this is welcome news, but we can’t stop fighting to prevent it from ever coming to pass.

The 1,689-page Prepaid Card Rule is billed as a consumer protection measure, branded with the tagline, “Know Before You Owe.” While that may be a catchy tagline, it is nothing more than a smokescreen for federal overreach.

Many businesses, including mobile payment apps, pushed back on the CFPB. Due to the diverse array of financial products that would be affected by this rule, their concerns varied, but each business cited the real impact this rule would have on innovation.

We have already seen shortsighted and overreaching regulations cripple community banks and credit unions. If the Prepaid Card Rule comes to pass, similar effects will happen to alternative financial services. Just as the former hinders small businesses' ability to access credit, the latter will stifle innovation in a budding sector of our economy.

Even more concerning are the consequences for consumers.

The more the rule has been studied, the higher compliance estimates have grown. It’s now estimated that the Prepaid Card Rule would cost hundreds of millions of dollars. This added expense would force prepaid card companies to exit the marketplace or pass down these costs to consumers, many of whom cannot afford to participate in our traditional banking system.

Due to rising checking account fees and minimum balance requirements, some 68 million Americans have turned to prepaid cards and accounts to manage their day-to-day financial needs. These consumers, who simply want to manage their finances at a low-cost rate, cannot afford a sweeping new rule that would impose higher costs.

Ultimately, the Prepaid Card Rule is just another example of a rule that hurts the very people it intends to protect.

Fortunately, we’ve been given a moment of opportunity to undo regulatory damage, and in this case prevent it altogether. The Congressional Review Act (CRA) is a wonky term for a potent tool to protect American consumers from federal overreach.

Multiple CRAs have already been signed by Trump, rolling back Obama-era regulations and protecting Constitutional rights. We are using the CRA concurrently in the House and Senate to push for an end to the Prepaid Card Rule before it can even begin to harm consumers.

The CFPB’s desperate delay is a sign that our efforts are working, but we will not be deterred from intervening to ensure this sweeping rule does not disrupt a growing, key sector of our economy.

Legitimate oversight over the financial sector is important, but when measures that could hurt up to 20% of Americans are unveiled by an agency that itself has no oversight, it is the responsibility of Congress to rein in any power grab.