CFPB Files Response to PayPal Motion for Summary Judgement in Case Challenging Prepaid Rule

The Consumer Financial Protection Bureau (Bureau) today filed its motion for summary judgement in the PayPal case. This filing comes in response to PayPal’s own motion for summary judgement from May. In brief, the Bureau is urging the Court to deny PayPal’s motion for summary judgement and to consider its motion for summary judgement. The Bureau also defends the Prepaid Rule in its entirety and argues that PayPal’s challenges distort the governing statutory framework, the Bureau’s reasons for adopting the Rule, and the scope of the Rule itself, and asks the Court to reject them. 
 
Specifically, the Bureau lays out the following arguments in defense of the Prepaid Rule: 
 

• Congress delegated the Bureau broad authority to promulgate rules to ensure that consumers understand the terms and conditions of financial products so that they can make informed financial decisions.
• The Rule easily satisfies the Administrative Procedures Act’s requirement for reasoned decision making.
• The Bureau thoroughly considered the benefits and costs of the Rule in compliance with its statutory obligations
• The Rule’s disclosure requirements are entirely consistent with the First Amendment.

 
In addition, the Bureau argues that even if the Court concluded that some of PayPal’s challenges had merit, that would not warrant the wholesale invalidation of the Rule that PayPal seeks. The Bureau, therefore, requests that if the Court rules one portion of the rule is invalid, the court should “sever and affirm” the remainder.
 
PayPal will now have the opportunity to file a reply in support of its motion for summary judgment and opposition to the Bureau’s motion for summary judgment, which is due by August 21, 2020. We will discuss this development further our Monthly GRWG call, which will take place on Thursday, June 9th at 2 PM ET.