Protect Prepaid Accounts Act of 2016

To amend the Federal Deposit Insurance Act to ensure that prepaid funds deposited in an insured depository institution satisfy the requirements of the primary purpose exclusion to the definition of deposit broker, and for other purposes. 1. Short title This Act may be cited as the Protect Prepaid Accounts Act of 2016 2. Limited exclusion for prepaid card deposits (a) In general Section 29 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831f (i) Limited exclusion for prepaid card deposits (1) In general Prepaid funds deposited by an agent or nominee in an insured depository institution shall satisfy the requirements of the primary purpose exclusion to the definition of deposit broker set forth in subsection (g)(2)(I) of this section, unless such agent or nominee controls the deposits and has the contractual right to cause the transfer of such deposits from the insured depository institution then holding the deposits to another insured depository institution selected by such agent or nominee. (2) Definitions In this subsection, the following definitions shall apply: (A) Prepaid funds The term prepaid funds (i) funds deposited through a prepaid program (as defined in 1010.100(ff)(4)(iii) of title 31, Code of Federal Regulations); or (ii) funds available from a card, code, or other device that is not otherwise an account (as defined in 1005.2(b)(1) of title 31, Code of Federal Regulations) that is established primarily for personal, household, or family purposes, where such card, code, or other device is— (I) issued on a prepaid basis to a consumer in a specified amount, or is not issued on a prepaid basis but capable of being loaded with funds thereafter; and (II) redeemable at multiple unaffiliated merchants for goods or services, usable at automated teller machines, or usable for person-to-person transfers. . (b) Applicability Nothing in this Act or the amendment made by this Act shall be construed to limit the application of any provision of the Federal Deposit Insurance Act, other than section 29 of such Act ( 12 U.S.C. 1831f 12 U.S.C. 1813(c)

Summary: Protect Prepaid Accounts Act of 2016 This bill amends the Federal Deposit Insurance Act to state that prepaid funds deposited by an agent or nominee in an insured depository institution shall satisfy the requirements of the primary exclusion from the definition of deposit broker, unless that agent or nominee controls the deposits and has the contractual right to cause the transfer of those deposits to another insured depository institution selected by the agent or nominee. (Generally, an insured depository institution that is not well capitalized may not accept funds obtained by or through any deposit broker for deposit into one or more deposit accounts.) The bill defines "prepaid funds" as funds deposited through a prepaid program or made available from a card, code, or other device that is not otherwise an account established primarily for personal, household, or family purposes, where the device is: issued on a prepaid basis to a consumer in a specified amount, or is not issued on a prepaid basis but capable of being loaded with funds; and redeemable at multiple unaffiliated merchants for goods or services or usable at automated teller machines or for person-to-person transfers.