Consumer Protections

The federal Electronic Fund Transfer Act (EFTA) and its implementing regulation, Regulation E, establish the rights, liabilities, and responsibilities of participants in electronic funds transfer systems. Regulation E was amended effective July 2007 to expressly apply to paycard accounts. Under Regulation E, paycard accounts must carry a number of consumer protections, including:

  • Initial disclosures of the terms and conditions of the paycard account
  • Limits on a consumer's liability for unauthorized transfers
  • Change-in-terms notices
  • Error resolution procedures and notices
  • Access to account information through periodic statements or an alternative to periodic statements

In 2016, the CFPB issued a final rule revising the consumer protections already applicable to payroll card accounts and extending those protections to a broad range of prepaid accounts. The rule, known as the Prepaid Rule, was revised in early 2018 and becomes effective April 1, 2019. Among other things, financial institutions that issue payroll cards will be required to provide new disclosures, both a long and short form, before an employee chooses to be paid via a payroll card account. For more information, see the CFPB's Guide identifying the key changes made by the Prepaid Rule for payroll card accounts.

Contact the APA's Government Affairs Task Force (GATF) Payroll Card Subcommittee for more information about current and pending paycard legislation.