CFPB issues interpretive rule to facilitate coronavirus relief payments

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued an interpretive rule that is intended to make it easier for consumers to receive pandemic-relief payments, including the economic impact payments authorized in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), through prepaid accounts. The interpretive rule is effective upon publication in the Federal Register.

According to the Bureau, government agencies are prohibited by the Electronic Fund Transfer Act (EFTA) and its implementing regulation, Regulation E, from requiring consumers to establish accounts for receipt of electronic fund transfers with a particular financial institution as a condition of receipt of a government benefit (known as the compulsory use prohibition). The Bureau’s interpretive rule concludes that, if certain conditions are met, certain pandemic-relief payments are not “government benefits” for purposes of Reg. E and thus are not subject to the compulsory use prohibition.