DDC judge vacates part of (Obama era) CFPB Prepaid Rule

March 31 was this weekend, and, as is customary in the D.C. federal district court, that meant a huge number of decisions over the last two weeks so judges could avoid appearing on the dreaded CJRA “six-month” list.

In one such long-awaited decision, Judge Leon granted PayPal summary judgment in its challenge to a 2016 CFPB rule regarding disclosures by digital wallet and prepaid account providers. In 2019, the court had found CFPB had exceeded its statutory authority in enacting the rule; the DC Circuit reversed as to one provision- the “short-form disclosure requirement” and remanded the case back to the district court for consideration of other arguments. In this week’s opinion, Judge Leon found that the short-form disclosure requirement was arbitrary and capricious, as the agency “lacked a rational justification for subjecting digital wallets” to the requirement, and utilized a deficient cost-benefit analysis.  The court thus vacated the requirement as applied to digital wallets.

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