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.