Subpart A Prepaid Accts – Under Regulation E, what is a government benefit account?

Compliance > Regulation E - EFTA
Q:  Under Regulation E, what is a government benefit account?
 
A:     A “government benefit account” is an account that is established: 
 
1. By a government agency; and 
 
2. For the purpose of electronically distributing government benefits, other than needs-tested benefits in a program established under state or local law or administered by a state or local agency.  
 
12 CFR 1005.15(a)(2).  
 
A government benefit account does not include an account established to distribute government benefits that are both: (1) needs-tested; and (2) in a program established under state or local law or administered by a state or local agency.  Government benefit accounts include accounts for distributing benefits that are not needs-tested (e.g., state unemployment insurance or child support payments), as well as all federal benefits regardless of whether they are needs-tested.
 
TIP - The Prepaid Rule does not change the definition of government benefit account.  Accounts established to distribute needs-tested benefits in a program established under state or local law or administered by a state or local agency are excluded from coverage under Regulation E.
 
 
 
ADDITIONAL INFORMATION:
This information was obtained from the CFPB’s Prepaid Rule, Small Entity Compliance Guide , which may be accessed here:  http://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/prepaid-rule/
 

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