In carrying out its statutory mandate, the CFPB has released a Request for Information (RFI) relating to the CARD Act, seeking information on two fronts.
The Consumer Financial Protection Bureau (the CFPB or Bureau) issued the RFI in order to get feedback from the public on the economic impact on small entities of the rules (the Rules) that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act). The RFI outlines in detail those Rules, which include changes to Regulation Z adopted by the Federal Reserve Board prior to the CARD Act but which were reflected in the act, and subsequent amendments to Regulation Z implementing the act. The CARD Act and the implementing Rules have had a significant impact on both the card industry and consumers.
The CARD Act and the Rules apply to credit card issuers and other creditors that offer consumers open-end credit that is not secured by the consumer’s home, and to certain credit bureaus. The purpose of the CARD Act was to establish fair and transparent practices related to extensions of credit to consumers.
The purpose of the RFI is to enable the Bureau to fulfill its statutory mandate under the Regulatory Flexibility Act to determine whether the Rules should continue in their current form, be amended to reduce any significant economic impact on small entities or be rescinded for such entities. This review is not being conducted as a result of the current COVID-19 economic conditions, although they may impact the responses. As of 2019, the CARD Act applied to slightly over 4,300 banks, thrifts and credit unions. Of those, approximately 3,400 were considered small entities.
The Bureau specifically asked about the scale of the current economic impact on small entities, including the impact on reporting, recordkeeping and compliance requirements; whether and how that impact could be reduced, consistent with the statutory objectives; and other relevant factors the Bureau should consider.
In this RFI, the Bureau also seeks comments from the public as to how the card market is functioning in general and on several specific aspects of the consumer credit card market. These questions are directed to all market participants—including consumers, issuers, industry analysts and other interested parties—and apply to all groups subject to the Rule, not only small entities. Under the CARD Act, this review must be conducted every two years, and it has resulted in the issuance of four previous reports issued by the Bureau.
The Bureau has indicated that it is interested in hearing comments on the experiences of consumers as well as issuers and those subject to the Rule as to the overall health of the consumer credit card market. In addition to stating that respondents are free to address any aspects of the credit card market, the Bureau has posed questions in seven specific areas, in each case related to consumer credit cards: the terms of credit card agreements and the practices of credit cards issuers; the effectiveness of disclosure of terms, fees and expenses of card plans; the adequacy of protections against unfair or deceptive acts or practices related to credit card plans; the cost and availability of credit cards; the safety and soundness of card issuers; the use of risk-based pricing for credit cards; and product innovation for credit card programs. Comments will be due 60 days following publication of the RFI in the Federal Register.
Why it matters
This is an opportunity for all constituencies to voice their comments and concerns. The Bureau notes that previous RFIs have resulted in changes to the Rules designed to benefit both issuers and consumers. Although mandated by statute and so the RFI is somewhat routine, current Bureau leadership may be especially open to comments from the card industry, now that the CARD Act and Rules have been in place for several years.