b'Credit, Debit & Prepaid CardsDuring 2021, Goodwin tracked six enforcement actionsPandemic Unemployment Assistance (PUA) program related to credit, debit, and prepaid cards, a slightin response to the COVID-19 pandemic. In particular, increase from the four such actions we tracked in 2020.2021 saw a spike in private litigation relating to prepaid This continues the slow increase in the number of suchunemployment and disability benefits cards. The CFPB actions, as there were only three actions in 2019. In 2021,also targeted other prepaid benefits cards, including total recoveries amounted to just over $24 million, aan action against JPay, an issuer of cards provided substantial decrease from the over $3.1 billion recoveredto individuals recently released from incarceration. in 2020 ($3 billion of which was attributable to a singleDirector Chopra indicated the action reflected broader recovery), but on trend with a steady increase relative toconcerns about the market power created by single-the $15 million in total recoveries in 2019.source government contracts for prepaid cards, and Despite the relatively small number of enforcementindicated that any misuse of a dominant position in actions and recoveries in this space over the pastthe offering of consumer financial services, where year, the CFPB and its new Director Rohit Chopra haveconsumers cannot easily switch, is unlawful under the indicated that they intend to monitor this space more[CFPAs] prohibition on abusive practices. In addition, closely, identifying a few areas of key interest. OneDirector Chopra expressly announced his intention particular focus will be prepaid cards offered throughto monitor and scrutinize companies disbursing single-source government contracts. Another area ofgovernment benefits through prepaid cards for any focus will be consumer banking, checking, and debitlegal violations or abuses of dominance.card-related fees, as Director Chopra announced inEnhanced CFPB Focus on Overdraft and NSF FeesDecember that the CFPB will focus attention on NSFIn December, Director Chopra announced the CFPBs or overdraft fees as well. Referring to such fees asplans to make overdraft and NSF fees a major focus junk fees and opportunistic penalties, Directorof their agenda. The announcement came alongside Chopra indicated that not only will the CFPB paythe publication of two CFPB research reports, which increased attention to overdraft fee revenues duringindicated that revenue from overdraft and NSF fees examinations, it will take action against large financialmake up nearly two-thirds of fee revenue, and that institutions whose overdraft practices violate therevenue from overdraft and NSF fees continue to rise. law. Additionally, in April 2021, the CFPB rescindedAccording to the CFPB, overdraft and NSF fees are an several of its policy statements providing complianceeffect of the lack of a transparent and competitive bank and regulatory flexibility to credit card issuers duringmarket due, in part, to the difficulty in switching financial COVID-19, which also indicated a more aggressiveinstitutions. Director Chopras statements specifically approach to enforcing compliance on these issuespointed to account pricing that appears to be free but, moving forward. in reality, is offset by opportunistic penalties that take advantage of complex rules and captive customers will Key Trends lay at the center of its efforts. Prepaid Benefit Cards Continue to Attract The CFPB announced a three-pronged approach to Regulatory Scrutiny. addressing overdraft and NSF fees. First, the CFPB As Goodwin explained last year, prepaid governmentpromised to take enforcement action against large benefits cards continue to carry increased litigationinstitutions whose overdraft and NSF practices violate and regulatory risk, particularly given the expansionthe law. Additionally, the CFPB noted that it intends to of certain benefits and with the advent of theprovide additional policy guidance outlining unlawful overdraft and NSF fee practices. Second, the Bureau 28'