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FPPC adopts rules tightening verification and reporting for prepaid card expense platforms (PEX, Divvy, bill.com)
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Summary
The commission adopted proposed regulation 18430.1 and related amendments to strengthen verification for contract vendors who collect online contributions, limit use of prepaid gift cards for contributions, and set reporting and recordkeeping criteria allowing certain prepaid expense-account platforms (e.g., PEX) when they provide detailed, auditable records.
The Fair Political Practices Commission adopted new and amended regulations on Nov. 20 meant to curb opaque use of prepaid cards in campaigns while permitting controlled use of expense-account platforms that provide robust records.
Senior counsel Zachary Norton and supervising special investigator Lance Hachigan presented investigative findings and proposed regulatory text that narrow the prohibition on prepaid cards and create an exception for managed prepaid expense-account systems that meet detailed record-keeping and verification standards. Norton said staff identified three issues: stronger verification requirements for contract vendors collecting online contributions, limits on prepaid cards for contributions and expenditures, and an exception for 'prepaid card and expense account management systems' that provide detailed online dashboards and receipts. "One of the most widely used platforms right now is the system called PEX," Norton said, noting staff had verified facts in an earlier FPPC grant letter and that the systems can offer real-time dashboards and receipt uploads.
Investigators explained how these platforms can improve transparency but also how committees sometimes report only "PEX card" as an aggregate line, which frustrates enforcement and public transparency. Hachigan said the platforms can show cardholder identity, merchant, date, and receipt images, and the proposed rules require itemization at the $100 threshold consistent with subvendor and bank-card reporting rules.
Commissioners pressed staff on stolen-card scenarios, treasurer liability, merchant-category restrictions, and whether the rules endorse specific vendors. Staff repeatedly said the rules do not endorse platforms but set criteria any system must meet; they also said the rules leave a treasurer responsible for oversight and reporting.
After discussion, the commission moved and adopted proposed regulation 18430.1 and amendments to regulations 18421.3 and 18401, setting verification, reporting and recordkeeping requirements for contract vendors and prepaid expense platforms and clarifying that itemization and subvendor reporting apply at the $100 aggregation threshold.
What this means: Campaign committees that use prepaid expense-account platforms must report detailed expenditures and identify individual cardholders and merchants where required; reporting that simply aggregates payments as "PEX card" or similar will not satisfy the public disclosure rules. Treasurers remain responsible for oversight, and platforms may be used only if they meet the regulation's recordkeeping and verification standards.
Next steps: Staff will publish the adopted regulation text and update guidance and reporting templates; enforcement and audit staff will follow the new reporting format when reviewing statements.
