On March 18, 2014, the Consumer Financial Protection Bureau
("CFPB" or the "Bureau") announced that it is seeking feedback about
"potential disclosures" that the Bureau "may propose
to be used on the packaging of prepaid cards," in connection
with an expected rulemaking in the spring.
As it has done before, the Bureau is looking to develop a
"model form" that would standardize financial product
disclosures. Specifically, as to prepaid cards, the Bureau
has explained that it wants its model form to "clearly present
a prepaid card's most important fees." To this end,
the Bureau has begun to consumer test its proposed disclosure
forms. In February, the Bureau conducted its first round of
interview testing in Baltimore, and on March 18, the Bureau tested
its proposed disclosure forms with consumers in Los
Angeles.
Since its inception, the Bureau has focused its regulatory efforts
on product disclosures. Indeed, the Consumer Financial
Protection Act, which is Title X of the Dodd-Frank Act, mandates
this focus. Section 1032 of the Dodd-Frank Act, 12 U.S.C.
§5532, provides that the "Bureau may prescribe rules to
ensure that the features of any consumer financial product or
service, both initially and over the term of the product or
service, are fully, accurately, and effectively disclosed to
consumers in a manner that permits consumers to understand the
costs, benefits, and risks associated with the product or
service." And any final Bureau rule concerning mandated
product disclosures also might include a model form that is
consumer-tested. Section 1032, in turn, provides that when a
"covered person" – that is a bank or nonbank
regulated by the Bureau – "uses a model form included
with a rule . . . . [that entity] shall be deemed to be in
compliance with the disclosure requirements" of the proposed
rule. In other words, using the model form provides a legal
safe harbor.
Any model form will reflect input that addresses the following
questions:
- "Do you understand how much each of these cards will cost to use?"
- "What would you like to see added or changed? Is there some way to make the information clearer?"
- "Is there anything you find confusing?"
This feedback can be provided through email, Facebook, and by posting comments to the Bureau's website.
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