Senators Intervene To Protect Prepaid Accounts From Sweeping Government Regulation
Introduce legislation to stop implementation of 1,689 page rule
WASHINGTON, D.C. – U.S. Senators David Perdue (R-GA), Tom Cotton (R-AR), Mike Enzi (R-WY), Johnny Isakson (R-GA), Ron Johnson (R-WI), James Lankford (R-OK), Mike Lee (R-UT), and Mike Rounds (R-SD) took action to prevent the Consumer Financial Protection Bureau (CFPB) from implementing a sweeping regulation on prepaid accounts, which would impact millions of consumers and stifle growth in the electronic payment marketplace.
“If the CFPB wants to continue to impose rules and regulations that impact every American’s financial well-being, it must answer to the American people,” said Senator Perdue, a member of the Senate Banking Committee. “As a business guy, I have experienced first-hand the impact overregulation has on growth and innovation. This rule is entirely too broad and would cripple the electronic payment marketplace which Georgians and millions of consumers across the country depend on.”
“The CFPB’s prepaid card rule is a disaster for consumers attempting to access prepaid cards,” said Senator Cotton, member of the Senate Banking Committee. “It’s this kind of over-regulation of the financial industry that’s caused regulatory costs to skyrocket while millions of Americans lack access to the banking system. I’m proud to support efforts to roll it back and bring regulatory relief to consumers across the country.”
“This rule from the Consumer Financial Protection Bureau is a prime example of what happens when an unaccountable federal agency designs a one-size-fits-all plan,” said Senator Enzi. “What we get is close to 1,700 pages of tedious regulations that impact businesses and have unintended consequences for consumers. It is time that Congress exercise what little oversight it has over this agency to try and hold it accountable to the American people.”
“The American people have spoken, and they want more choice and less government control,” said Senator Isakson. This is a first step toward reining in CFPB’s excessive power and making it accountable to Congress and the American people.”
“The Consumer Financial Protection Bureau’s 1,800-page prepaid accounts rule is just another example of federal overreach and red tape that throws up barriers to new payment options for consumers,” said Senator Johnson. “Repealing this duplicative rule will streamline access to mobile technologies like PayPal and Venmo that people have come to rely on in their day to day lives.”
“Consumers should be protected and be able to conduct financial transactions without undue burden,” said Senator Lankford. “But, rather than focusing on the consumer, the CFPB has issued a broad 1,600 page rule that causes more confusion for the consumer and subjects many payment systems to burdensome requirements similar to major banking operations. A CRA on this rule will allow Congress to prevent an unchecked federal regulator from preventing consumers to select the type of payment systems that work best for them.”
“Consumers are adopting prepaid cards for a reason: they are a low-cost alternative to other banking services,” said Senator Lee. “CFPB’s prepaid card rule would only stunt this growth and ultimately harm consumers by saddling this industry with $1.53 billion in unnecessary compliance costs.”
“This rule is yet another example of CFPB overreach that goes far beyond the scope of their jurisdiction and authority,” said Senator Rounds, a member of the Senate Banking Committee. “Onerous regulations like these cost consumers and small business owners far too much money and time. Overturning this misguided rule is one of the first of many steps we can take in reigning in the CFPB. I look forward to working with my colleagues on the Senate Banking Committee to develop smarter, more efficient banking policies that benefit all consumers and creates a level playing field within the financial services industry.”
The broad rule released on October 5, 2016 and published on November 22, 2016 overregulates reloadable prepaid cards and captures digital wallets from Venmo, Google Wallet, and PayPal. If it were to go into effect, the rule would negatively impact innovation and ultimately sideline practical products used in the electronic payment marketplace. While the CFPB’s intent was to make improvements to protect consumers, the proposed rule is entirely too expansive.
The senators’ resolution, S J. Res. 19, would nullify the CFPB’s rule.
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