The CFPB has issued another request for information about the credit card market that identifies significant new issues of CFPB interest.  The request is intended to inform the CFPB’s biennial review of the credit card market mandated by the CARD Act.  Based on its previous biennial reviews, the CFPB issued its first and second reports to Congress in, respectively, October 2013 and December 2015.

On April 13, 2017, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar, “The CFPB’s RFI and Other Important Recent Credit Card Developments.”  The webinar registration form is available here.

In the current request, the CFPB lists thirteen 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 nine topics involve “areas of further interest” as to which the CFPB has raised numerous new issues.  Since topics and issues identified by the CFPB in previous RFIs and reports were frequently the subject of heightened CFPB supervisory scrutiny and enforcement activity, the topics and issues identified in the new RFI can be expected to receive similar treatment.  Comments in response to the RFI are due on or before June 8, 2017.

The nine topics and some of the CFPB’s related questions are:

  • Deferred interest products.  As a follow up to the CFPB’s previous finding that such products “can pose risks to consumers,” questions include how market trends and practices have evolved since the 2015 report and what areas of risk still remain for consumers.
  • Subprime specialist products.  In its 2015 report, the CFPB highlighted the risk for consumers created by the reliance of certain subprime credit card issuers on fees.  As a follow up, the CFPB asks how the consumer experience of using such cards compares to the experience of consumers with similar credit profiles when using mass market credit cards.
  • Third-party comparison sites.  The CFPB states that it has received indications that some comparison sites generate significant revenue from issuer payments made in exchange for approved applications and that contracts between sites and issuers can influence or determine which (and how) products and choices are presented to consumers.  Questions include the degree to which consumers understand the benefits and risks of using comparison sites and the degree to which existing standards, practices, and disclosures protect consumers from unfair, deceptive, or abusive acts and practices.
  • Innovation.  The CFPB states that its prior review noted the following innovation trends that could substantially impact the credit card market: (1) advancements in payment security and form factor, including the widespread adoption of EMV standards (i.e., standards for cards with computer chips and the technology used to authenticate chip-card transactions) and the possibility of wider adoption of mobile payments, and (2) the trend toward new consumer lending models potentially competing with credit cards, either indirectly through marketing for debt consolidation or directly at point-of-sale.  Questions include the degree to which either of these trends have advanced in expected or unexpected ways in the past two years and which of these trends appears likely to have the greatest impact on the consumer credit card market in the foreseeable future.
  • Secured credit cards.  With the CFPB observing that it has noted indications of increased secured card originations and increasing interest in the product by new market entrants, questions include what is the current state of the secured credit card market and what evidence supports indications of positive consumer outcomes.
  • Online and mobile accounting servicing.  The CFPB states that its prior review found that increasing numbers of consumers are enrolling in issuers’ online and mobile account servicing platforms, have opted out of receiving paper statements, and appear to rarely access their statements online.  This results in such consumers rarely encountering required disclosures.  Questions include the extent to which consumers who are making only minimum payments or have a propensity towards making late payments are not encountering disclosures and what other potential benefits or risks a broader shift to digital account servicing presents to consumers.
  • Rewards products.  Noting that its prior review identified areas of concern regarding the impact of rewards on consumer choice and credit card usage, as well as disclosure practices and program structure, questions include how market trends and practices have changed since the CFPB’s prior review and what areas of risk remain for consumers.
  • Variable interest rates.  Noting that its prior review found that most credit cards now have variable interest rates that will rise when market rates rise (something widely expected to happen soon), questions include the extent to which consumers are aware that their interest rates will increase on outstanding card balances when market rates increase and what practices are issuers using to inform consumers of such rate increases.
  • Debt collection.  Noting that its prior review examined the policies and practice of issuers’ collection practices and debt sales, questions include what changes have been made in such policies and practices since the CFPB’s last review, what drove such changes, and what associated metrics changed as a result.