| WASHINGTON, April 18
WASHINGTON, April 18 A group that supports a new
prepaid card rule sued the U.S. Consumer Financial Protection
Bureau on Tuesday for information it says could raise doubts
about why Republicans are trying to kill the measure.
In October, the bureau, created after the 2007-09 financial
crisis to protect individuals against fraud, finished a
regulation requiring prepaid card sellers such as Mastercard Inc
and Greendot to display their terms prominently and limit
The group, Allied Progress, said a resolution introduced
earlier this year to wipe out the rule was a political favor to
industry leader Total System Services Inc, or TSYS.
According to the Center for Responsive Politics, the company has
donated thousands of dollars to Georgia Senator David Perdue, a
Republican member of the Banking Committee taking the lead on
TSYS's NetSpend division is based in Perdue's home state and
could lose at least $80 million a year in overdraft fees if the
rule takes effect, according to the National Consumer Law
The bureau declined to comment. Neither Perdue's office nor
TSYS had an immediate comment.
The rule is new enough for Congress to repeal it under the
1996 Congressional Review Act, which allows lawmakers to wipe
out recent regulations with simple majorities in both chambers
and a signature from the president.
A counterpart resolution to repeal the rule has also been
introduced in the House of Representatives.
Perdue and U.S. Representative Roger Williams, a Republican
member of the House Financial Services Committee, wrote in
Forbes that the rule "would upend an entire sector of our
economy, stifle innovation, and deprive consumers of access to
With time running out for Congress to repeal Obama-era
rules, Perdue has taken a procedural step to rush his resolution
to the full Senate for a vote after the chamber returns from
recess next week.
In response, Allied Progress asked the Consumer Financial
Protection Bureau to quickly provide a raft of documents
encompassing communications from Perdue and other lawmakers
during the three years the rule was drafted, as well as
interactions with TSYS and NetSpend.
But the bureau said it could not process the Freedom of
Information Act request in an expedited way, and Allied Progress
is now asking the U.S. District Court for the District of
Columbia to require the agency to provide the documents
Prepaid card providers have said the new rule's requirements
on posting terms are complicated and expensive to implement.
They also say they sometimes need overdraft fees to cover risks
associated with the cards, which are also often used in place of
traditional paychecks for lower-income workers and for student
Earlier this month, 18 states' attorneys general sent a
letter to congressional leaders opposing the resolutions, saying
that overdraft penalties, as well as undisclosed fees, can put
consumers in significant debt. They also wrote that others
offering prepaid cards largely support limiting overdrafts.
(Reporting by Lisa Lambert; Editing by Lisa Von Ahn)