As mandated by the Credit Card Accountability, Responsibility, and Disclosure Act ("CARD"), the Consumer Financial Protection Bureau ("CFPB" or the "Bureau") will be performing a review of the credit card industry this year. The CARD Act of 2009, passed after the Great Recession to improve consumers' experiences with the credit card industry, requires the CFPB to do such a review of the industry once every two years. To begin the process of assembling the 2015 report, the CFPB has reached out to credit card customers of various companies to accumulate data for its report. The Bureau is focusing its research on the terms of credit card agreements, fees, costs to the companies, and the efficacy of the disclosure of said fees and costs.1
The CFPB's 2013 review of the industry included some positive findings, including that more credit had opened up for Americans since 2008, there were less "back-end penalty fees and APR repricing," and CARD made it easier to compare different credit card options from competing companies.2 In addition to researching fees and credit card agreements, the CFPB is also hoping to gather information about "whether current protections against unfair, deceptive, or unlawful practices are effective and whether regulations for add-on products, grace periods and other card terms are sufficient."3 The CFPB will also to be thoroughly review consumers' understanding of reward offerings to ensure that they are transparent and that companies are not misleading customers.
The CFPB will also examine "debt collection practices, specifically for debt being charged off or sold, and how issuers are applying ability-to-repay standards to applicants."4 The Bureau is interested in "how collectors are minimizing losses from delinquent borrowers before the debt is charged off and how they secure recoveries..."5 As far as ability-to-pay standards, the CFPB wants to learn more about how companies decide to extend a line of credit and how they decide to increase the amount of credit available to customers.
On the heels of a major report criticizing arbitration clauses in consumers' financial contracts, analysts believe that this report is another opportunity for the Bureau to set the groundwork for more rules to regulate the credit card industry. Jaret Seiberg of Guggenheim Securities projects that the "report is likely to set the blueprint for regulations and enforcement in 2016."6 If the CFPB follows the blueprint for its report regarding arbitration clauses, credit card customers could see more protections and more transparency in their dealings with companies. The CFPB's report is expected to be completed sometime later in 2015.
For a full link to the CFPB's 2013 report, see: http://files.consumerfinance.gov/f/201309_cfpb_card-act-report.pdf.
If you have any questions regarding this subject or this posting, please contact Valerie Chang (firstname.lastname@example.org) or Michael Ols (email@example.com). We can also be reached toll-free at (866) 540-5505.
Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains an affiliate office in London, England and is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.