Payments

"50 Third, the CFPB amended the Prepaid Accounts Rule to create an exception from the rule's hybrid prepaid-credit card provisions for digital wallets linked to credit card accounts that meet certain conditions.51 A hybrid prepaid-credit card is a prepaid card that has access to "overdraft credit features" offered by the prepaid account issuer, an affiliate of the issuer, or the issuer's business partner.52 Under the Prepaid Accounts Rule, a digital wallet that can store funds is a prepaid account under Regulation E.53 In response to the CFPB's proposed March 2017 amendments to the Prepaid Account Rule, a digital wallet provider whose wallet can store funds (and thus is a prepaid account) commented that it was concerned that a digital wallet could be covered by the hybrid prepaid-credit card provisions of the Prepaid Accounts Rule "where a consumer links a digital wallet account to credit card accounts that are offered by companies with which the digital wallet provider has cross-marketing or other arrangements that would create a business partner relationship" under the 2016 version of the Prepaid Account Rule.54 The commenter was concerned that a number of provisions applicable to hybrid prepaid-credit cards, such as the thirty-day waiting period after the registration of a prepaid account before a card issuer can solicit or open new credit features or the long-form disclosure requirements of Regulation E, would harm consumers, including by causing customer confusion and reducing consumer choice.55 In response to the digital wallet provider's concerns, the CFPB created a limited exemption from the definition of "business partner" for arrangements between credit card issuers and prepaid account issuers that satisfy all of the following conditions: (1) the linked credit card account is an open-end consumer credit card accessible through a traditional credit card; (2) the prepaid card must not be allowed to draw or transfer credit from the credit card account for the purpose of completing transactions with the prepaid card unless the consumer has sent a written request authorizing the linkage of the two accounts that is signed and initialized separately; (3) the acquisition or retention of the prepaid account or the credit card account must not be conditioned on whether the consumer has authorized the linkage of the two accounts; and (4) the terms and conditions of the accounts are not varied depending upon whether the accounts are linked.56 The linked cred