CFPB Weighs in on Payroll Cards; Agency’s Leader Takes Drubbing from House Republicans (Sept. 16, 2013)
Sept. 16, 2013
The Consumer Financial Protection Bureau (CFPB) is the latest to weigh in on payroll cards by issuing a bulletin to companies reminding them that employers cannot require their employees to receive wages on a payroll card.
“Employees must have options when it comes to how they receive their wages,” CFPB Director Richard Cordray said in a statement. “And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections,” such as fee disclosures, access to account history, limited liability for unauthorized use, and error resolution rights. The bulletin comes two months after a group of U.S. Senators called on government regulators to investigate fees and practices associated with payroll cards, and reports that New York State Attorney General Eric Schneiderman was looking into payroll programs at some of the nation’s largest employers.
Although the bulletin simply serves as an overview of existing law, it should prove helpful because “the CFPB is letting employers know exactly what it expects from employers and financial institutions, and what [the agency] will be looking for in the event of an investigation,” says Cathy Beyda, of counsel at Paul Hastings and a recent author of a Paybefore Viewpoint on payroll cards.
“I don’t think many employers knew they needed to look at the banking laws and regulations when deciding how to pay their employees—it simply is not intuitive,” Beyda tells Paybefore. “When clear guidance is given to employers, like the CFPB has done, they will feel more confident implementing electronic wage payment programs.”
In related news, Republican lawmakers, including Committee Chairman Jeb Hensarling (R-Texas) and Rep. Sean Duffy (R-Wisc.), upbraided Cordray during a hearing last week over his agency’s failure to provide answers to questions they had submitted two months ago—including how the CFPB collects consumer financial data and on how many U.S. citizens the agency collects data.
As reported in last Thursday’s Pay News, Cordray presented the agency’s semi-annual report to the U.S. House Committee on Financial Services. During the often contentious hearing, during which some lawmakers accused his agency of stonewalling, Cordray reportedly told committee members that he would respond to their questions within five days. Cordray’s report to the House committee was delayed until he was officially confirmed as CFPB director by the U.S. Senate, following heated debate across party lines.