CFPB’s Submission Overhaul for Credit Agreements Could Streamline Prepaid Process (Mar. 2, 2015)
The CFPB is updating the system credit card issuers use to submit their card agreements to the agency’s public database, and the new automated process could be used by prepaid card issuers if submitting cardholder agreements as proposed by the agency’s NPRM on prepaid accounts becomes law.
Last week, the CFPB issued a proposal to suspend for one year credit card issuers’ obligations to submit credit card agreements to a publicly available online database—as required by the CARD Act—while the bureau develops an automated submission system that would enable faster posting of new and revised agreements. Using the current manual submission system, it can take up to “several months” to post new or updated agreements to the database, according to the CFPB. During the temporary suspension—which would cover four quarterly submission deadlines—credit card issuers still would be required to post card agreements on their own Websites, and the CFPB would collect agreements from the largest card issuers’ sites and post them to its database.
In its NPRM on prepaid, issued last November, the CFPB included a plan to create a public database for prepaid card agreements. The automated submission process is likely to be used by prepaid issuers, says Brad Fauss, executive vice president and general counsel, NBPCA. Fauss notes that an automated system would be especially important in managing the prepaid agreement database, which he expects to be much larger than the credit card database. “Given that the volume of prepaid card agreements to be uploaded is expected to be much greater than the number of credit card agreements, the problems of a manual submission system would be magnified for prepaid agreements,” he tells Paybefore.
Fauss said the timeline of implementation of the prepaid database likely won’t be affected by the overhaul of the credit card submission process. “I suspect that the new automated credit card agreement submission process will be completed before the implementation deadline for prepaid cardholder agreement submissions under the NPRM on prepaid accounts.”
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