What the CFPB Leadership Dispute Means for the Prepaid Account Rule

By Eric A. Love and Dan S. Cohen

With Office of Management and Budget Director Mick Mulvaney in place as Acting Director of the Consumer Financial Protection Bureau (CFPB) and a legal challenge to his appointment to that position brought by CFPB Deputy Director Leandra English continuing to proceed through the courts, prepaid industry participants are rightly asking what this ongoing leadership dispute means for the CFPB’s sweeping Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts.

After a four-year CFPB rulemaking process and a delay earlier this year of the Final Rule’s original October 1, 2017 effective date, the legal battle over who will head the CFPB has created additional uncertainty within the prepaid industry regarding the fate of the Final Rule.  Although many industry participants have already taken steps to comply with the Final Rule, others continue to express concerns about the time it will take to come into full compliance and are advocating that the CFPB delay for one year the April 1, 2018 effective date.  Since taking the helm at the CFPB, Acting Director Mulvaney swiftly instituted a 30-day freeze on new regulations and hiring.  Although it is unclear if the Final Rule will be subject to further delay, the temporary rulemaking freeze likely covers the CFPB’s pending proposed changes to aspects of the Final Rule related to credit cards linked to digital wallets and to error resolution for unregistered accounts.

Notably, Deputy Director English recently filed a motion in federal court in D.C. seeking a declaratory judgment and preliminary and permanent injunction to block the President’s appointment of Acting Director Mulvaney.  Ms. English’s motion follows the court’s previous ruling against her request for a temporary restraining order to prevent the President’s appointment, a decision that effectively recognized Mr. Mulvaney as the Acting Director.  Given the regulatory uncertainty that the leadership changes at the CFPB portend, all eyes are expected to be on the court when it hears Ms. English’s latest motion on December 22, 2017.