The CFPB has issued another request for information about the credit card market. The request is intended to inform the CFPB’s biennial review of the credit card market mandated by the CARD Act. In October 2013, the CFPB issued its first report to Congress on the results of its first review. In that report, the CFPB identified six “areas of concern,” such as add-on products and rewards programs, that might warrant further scrutiny.
In the current request, the CFPB lists 12 topics on which it seeks information. The first four topics concern issues that the CFPB is required by the CARD Act to consider in its review. The next six topics involve the “areas of concern” identified in the 2013 report. The last two topics involve “specific areas of interest” identified by the CFPB after issuing the 2013 report. Comments are due on or before May 18, 2015.
The 12 topics and some of the related questions are:
- The terms of credit card agreements and the practices of credit card issuers. Questions include how the substantive terms and conditions of credit card agreements or the length and complexity of such agreements changed over the past two years.
- The effectiveness of disclosure of terms, fees, and other expenses of credit card plans. Questions include how effective current disclosures of rates, fees, and other cost terms of credit card accounts are in conveying to consumers the costs of credit card plans.
- The adequacy of protections against unfair or deceptive acts or practices or unlawful discrimination relating to credit card plans. Questions include whether unfair, deceptive, or abusive acts and practices, or unlawful discrimination still exists in the credit card market, and if so, in what form and with what frequency and effect.
- Whether implementation of the CARD Act has affected (i) the cost and availability of credit, particularly with respect to non-prime borrowers; (ii) the use of risk-based pricing; or (iii) credit card product innovation.
- Online Disclosures. Questions include how card issuers ensure that consumers using different channels, including mobile, receive effective disclosures both at the point of application and in managing existing accounts.
- Rewards Products. Questions include whether rewards disclosures are being made in a clear and transparent manner, what further improvements in disclosure would benefit cardholders at this point, and what costs would be incurred in providing such disclosures.
- Grace Periods. Questions include whether grace periods are being disclosed in a clear and transparent manner, what further improvements in disclosure would benefit cardholders at this point, and what costs would be incurred in providing such disclosures.
- Add-On Products. Questions include what actions issuers have taken to prevent unfair, abusive, or deceptive marketing practices and what harmful practices persist.
- Fee Harvester Cards. Questions include what is the prevalence and magnitude of application fees or other fee harvesting practices in connection with account opening.
- Deferred Interest Products. Questions include whether consumers who use deferred interest promotions understand the risk of being charged retroactive interest.
- Debt Collection. Questions include what practices are used to (1) minimize losses from delinquent customers prior to charge off and with what results, and (2) secure recoveries post charge off and with what results. The CFPB also asks about the extent to which card issuers sell charged off accounts to debt buyers and the terms of such sales.
- Ability to Pay. Questions include how card issuers are determining whether credit card applicants have sufficient income or assets to qualify for new credit or a credit line increase.