The CFPB is seeking information on how the CARD Act amendments to the Truth in Lending Act have impacted consumers and the credit card industry. Signed into law in 2009 and implemented through a series of changes to Regulation Z that became effective in three stages spanning August 2009 to October 2011, the CARD Act imposed significant new restrictions on credit card pricing practices. Those restrictions included limits on when interest rates can be increased, the amount of penalty fees and when overlimit fees can be charged. The CARD Act also created new requirements for payment timing and allocation, monthly statement disclosures, consideration of ability to pay, and on-campus marketing.
According to the CFPB’s press release, a conference the CFPB held in February 2011 found that the CARD Act had largely curtailed the practice of raising interest rates on existing cardholder accounts, substantially reduced consumer late fees and nearly eliminated overlimit fees. The CFPB’s request for information is part of a review of the credit card market required by the CARD Act, and the results of the CFPB’s review will be contained in a report to Congress. Comments on the CFPB’s request are due by February 19, 2013.
The notice lists seven subjects on which the CFPB is requesting information. For each subject, the CFPB asks a series of questions. Those subjects and questions include:
- The terms of credit card agreements and effectiveness of disclosures. The CFPB asks how the terms and conditions of credit card agreements have changed due to the CARD Act, whether issuers have changed pricing, marketing, underwriting or other practices, and how effective post-CARD Act disclosures of rates, fees, and other cost terms. of credit card accounts have been in terms of resulting benefits or harm to consumers.
- Adequacy of protections against unfair or deceptive acts or practices. The CFPB asks for a description of any unfair or deceptive acts or practices that still exist in the credit card market, how such acts or practices might be prevented, and whether issuers have circumvented, or tried to circumvent, any CARD Act protections against unfair or deceptive acts or practices.
- Cost and availability of credit. The CFPB asks if the CARD Act has changed the upfront interest rate or overall cost of credit and had any non-price impacts on credit access, with particular emphasis on non-prime borrowers.
- Safety and soundness. The CFPB asks if the CARD Act has impacted the quality of issuer assets or return on equity.
- Risk-based pricing; innovation. The CFPB asks if issuers are still using
risk-based pricing and how the CARD Act has impacted innovation.