United States: CFPB Initiates Fourth Review Of The Consumer Credit Card Market

On January 31, 2019, the Consumer Financial Protection Bureau (CFPB or Bureau) published a Request for Information (2019 RFI) regarding the consumer credit card market. In accordance with Section 502(a) of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Bureau conducts a biennial review of the consumer credit card market by soliciting public comment and feedback. In the past, the Bureau has used these reviews to help set the Bureau's priorities as they relate to the consumer credit card market. The CFPB conducted its previous review in 2017, through its March 2017 RFI and the resulting 2017 CARD Act Report.

The CFPB uses these RFIs to gather feedback from participants in the consumer credit card market, including consumers, credit card issuers, and consumer advocates. Unlike the 2015 and 2017 RFIs, the 2019 RFI does not ask for comment on any "areas of further interest" to the Bureau. Instead, the 2019 RFI requests comment only on the specific topics required by the CARD Act. Nonetheless, the CFPB encourages commenters to address additional issues related to the consumer credit card market that they believe are worthy of the CFPB's attention. Comments on the 2019 RFI are due by May 1, 2019.

The Bureau is seeking specific comment on the following topics.

  • The terms of credit card agreements and the practices of credit card issuers. The CFPB asks, for example:

    • How the substantive terms and conditions of credit card agreements or the length and complexity of such agreements have changed over the past two years.
    • How issuers have changed their pricing, marketing, underwriting, or other practices.
    • How the terms of, and practices related to, major supplementary credit card features (such as credit card rewards, deferred interest promotions, balance transfers, and cash advances) are evolving.
  • The effectiveness of disclosure of terms, fees, and other costs related to credit card plans. The CFPB requests comment on:

    • The effectiveness of current disclosures of rates, fees, and other costs in conveying to consumers the costs of credit card plans.
    • Further improvements in disclosures, if any, that would benefit consumers and the costs that would be incurred by card issuers if such improvements were required.
    • Adaptations to credit card disclosure regimes in the digital environment that would better serve consumers or reduce industry compliance burden.
  • The adequacy of protections against unfair or deceptive acts or practices in connection with credit card plans. The Bureau asks:

    • What unfair, deceptive, or abusive acts and practices exist in the credit card market and how prevalent they are.
    • How any such conduct might be prevented and at what cost.
  • How the cost and availability of consumer credit cards, including with respect to non-prime borrowers have changed since the 2017 CARD Act Report. The CFPB requests comment on, for example:

    • What is responsible for changes (or absence of changes) in cost and availability.
    • Whether the impact of the CARD Act on cost and availability has changed over the past two years.
    • How, if at all, the characteristics of consumers with lower credit scores are changing.
  • How the use of risk-based pricing has changed since the 2017 CARD Act Report. The CFPB asks:

    • How the use of risk-based pricing for consumer credit cards has changed since the Bureau reported on the credit card market in 2017, and what has driven those changes or lack of changes.
    • Whether the impact of the CARD Act on risk-based pricing has changed over the past two years.
    • How the CARD Act provisions relating to risk-based pricing have impacted (positively or negatively) the evolution of practices in this market.
  • How credit card product innovation has changed since the 2017 CARD Act Report. Finally, the Bureau requests comment on:

    • How credit card product innovation has changed since the Bureau reported on the credit card market in 2017, and what has driven those changes or lack thereof.
    • Whether the impact of the CARD Act on product innovation has changed over the past two years.
    • How broader innovations in finance, including new products and entrants, evolving digital tools, greater availability of and new applications for consumer data, and new technological tools (like machine learning), have impacted the consumer credit card market, either directly or indirectly.
    • The ways that the CARD Act encourages or discourages innovation.

The 2019 RFI is an opportunity for industry and the public to identify for the Bureau inefficiencies in the consumer credit card market, including as they relate to the ways that consumers are using credit cards through different technology channels. For example, the Bureau has indicated in prior rulemaking agendas an interest in pursuing disclosure modernization, which is a topic included in the 2019 RFI.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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