In October 2016, the Consumer Financial Protection Bureau (CFPB) outlined increased transparency measures for prepaid spending cards. The CFPB’s rule, nicknamed “Know Before You Owe,” stresses the importance of promoting clear and accessible customer information.
On February 1, 2017, Senator David Perdue introduced legislation (S.J. Res 19) to nullify the CFPB’s new prepaid card rule and limit the organization’s authority. Since introduction, S.J.Res 19 has moved to the Senate Banking, Housing, and Urban Affairs Committee for review.
With the “Know Before You Owe” rule, consumers would have access to information about their account and charges. Rules and regulations would be provided prior to purchase of the card. Consumers would also be provided with a publicly available card agreement after the purchase is complete. Additionally, the rule offers consumers protection against overdraft fees.
Under the rule, prepaid companies must ensure that the owner of the prepaid card has the ability to repay any debt acquired on the card. The company must also offer ample and reasonable time to pay back late fees and limit any interest charges accumulated on the card.
The CFPB issued the “Know Before You Owe” rule in October, 2016 with the intent that the rule would be enforced starting October, 2017 to ensure prepaid companies would have ample time to adjust their policies.