A Commentary on CFPB’s Delay in Announcing Further Delay of the Prepaid Card Rule

The Consumer Financial Protection Bureau has issued a brief press announcement that the Prepaid Card Rule would be further revised and that the effective date for compliance will be further postponed from the current deadline in April 2018.

The announcement creates more worry than relief – it’s just a tease. The announcement did not say what changes would be made or when the new deadline will be. It only said that amendments to “certain aspects” of the rule would be coming “soon after the new year.”  No doubt the Bureau meant for this announcement to be helpful to someone, but it is not clear if anyone is actually helped.

Prepaid card issuers are scrambling to implement the systems changes and new business processes necessary to support the sweeping changes required by the rule. With this announcement, they must now wonder which of those efforts will turn out to be wasted, or perhaps need to be re-worked, and they can’t pause pursuing any specific implementation efforts until the actual amendments are published. Are they supposed to trust that the extra time to be allowed by the CFPB will be sufficient to accommodate this pivot?

This dilemma brings to mind the old saying about advertising – “I know that half of the advertising budget is wasted spending; we just don’t know which half.”  Consumers, meanwhile, who presumably would benefit from the rule’s new protections, must continue to wait, but they don’t know how much longer. 

Adding more uncertainty, if the challenge to Mick Mulvaney’s appointment as interim director of the Bureau is successful, it is not clear what Leandra English would do to change course again if she ultimately takes control. Even if she is successful, her leadership would last only until a new director is duly appointed. That is questionable too, given challenges still winding their way through the courts to the constitutionality of the Bureau’s quasi-independent status and congressional interest in modifying the leadership structure.

All of this uncertainty adds up to real costs for the issuers focusing on the nuts and bolts of compliance and delays in bringing the intended benefits to consumers. All of our questions will be answered “soon.” Happy holidays.