Card Forum: Put Your Durbin FAQ Plan in Writing (April 9, 2013)
Card Forum kicked off its 25th annual conference in Boca Raton yesterday with “Prepaid Day” and not surprisingly, the Fed’s FAQs on Reg. II came up during a session on regulation. The guidance, which came out two weeks before the April 1 compliance deadline for network routing rules, appears to require PINs to be issued when cards are activated. This is a departure from the way PINs traditionally are delivered to consumers and could make compliance investments prior to the guidance moot. Karen Garrett, attorney in the banking and financial services division of Stinson Morrison Hecker LLP, suggested that whatever prepaid issuers decide to do, they should put their decisions in writing.
The Fed is responsible for the regulation, she explained, but it will be enforced by an issuer’s primary regulator. If you have a legal opinion about whether your programs are in compliance or if you have a plan to move to comply with the guidance, you need to put it in writing, she suggested. This can help make clear to your regulator that you’re doing what you reasonably believe to be necessary to comply with Reg. II. While the industry is hoping for clarification from the Fed, some issuers have considered pulling cards from the market—another costly proposition.
