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A Commentary on CFPB’s Delay in Announcing Further Delay of the Prepaid Card Rule

The Consumer Financial Protection Bureau has issued a brief press announcement that the Prepaid Card Rule would be further revised and that the effective date for compliance will be further postponed from the current deadline in April 2018.

The announcement creates more worry than relief – it’s just a tease. The announcement did not say what changes would be made or when the new deadline will be. It only said that amendments to “certain aspects” of the rule would be coming “soon after the new year.”  No doubt the Bureau meant for this announcement to be helpful to someone, but it is not clear if anyone is actually helped.

Prepaid card issuers are scrambling to implement the systems changes and new business processes necessary to support the sweeping changes required by the rule. With this announcement, they must now wonder which of those efforts will turn out to

Get Ready for New Data Transfer Security Standard for POS Systems

Retailers are still feeling the pain from implementing EMV-compliant POS systems. An article by Kate Fitzgerald in the PaymentsSource Technology newsletter (August 8, 2017)  caught our eye. The gist of it is that the PCI-DSS standard for data transmission will change in June of next year. Card network rules require Acquirers to require their merchants to comply with the PCI-DSS standard and the companion PA-DSS standard, so this change will leave them out of compliance if they have not implemented a newer version of the data transmission security standard.

There is not a liability shift in the rules specifically related to the new standard, but merchants will be subject to fines and the deficiency will become apparent when they undergo their periodic security audit after the June 30 date. However, the old standard is being dropped by the Payment Card Industry Security Standards Council because it leaves the POS systems

Bans on Credit Card Surcharges Face First Amendment Challenges

State laws that prohibit retailers from charging customers a surcharge for using a credit card are being challenged on First Amendment grounds.

For more than four decades, California’s Song-Beverly Credit Card Act of 1971 prohibited retailers from charging credit card customers such a surcharge. In Italian Colors Restaurant, et al. v. Harris, 99 F.Supp.3d 1199 (E.D. Cal. 2015), a federal judge ruled that the law unconstitutionally limits retailers’ freedom of speech. The California attorney general appealed, and the case is set for oral argument before the Ninth Circuit Court of Appeals on August 17.

The outcome may be influenced by the U.S. Supreme Court’s decision in March of this year in Expressions Hair Design v. Schneiderman, 137 S. Ct. 1144 (2017), that a similar New York ban on credit card surcharges implicates the First Amendment. That case has been remanded to the Second Circuit to determine whether the ban

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