The CFPB has issued a report focusing on end-of-year credit card borrowing and repayment of credit card balances in the following year.  The report is based on data from the Bureau’s Consumer Credit Panel, a nationally-representative sample of approximately five million de-identified credit records maintained by one of the three nationwide credit reporting companies.

The report explores how credit card borrowing evolves during and after the annual November/December peak in consumer spending, how quickly these balances are repaid in subsequent months, and how the year-end period of borrowing may correlate with financial distress.

The report’s key findings include:

  • The year-end rise in consumer debt is most pronounced in general purpose credit card debt and retail store card debt.  General purpose credit card balances rise nearly 4 percent from their October baseline as compared with retail store card balances which rise 8 percent increase from their October baseline.  In contrast, auto loans and home equity credit lines do not exhibit similar seasonality.  The CFPB observes that to the extent the consumers who take on new credit card debt during the holiday season are the same consumers who repay that debt shortly thereafter in the following year, it is an indication that, on average, consumers may use year-end credit card borrowing as relatively short-term financing.
  • The seasonality in borrowing on general purpose credit cards is most pronounced for consumers with prime and superprime credit scores. In contrast, general purpose credit card balances for consumers with subprime credit scores exhibit relatively little seasonality.  The CFPB observes that this difference is at least partially attributable to higher card utilization rates of consumers with subprime credit scores.
  • Delinquency rates on credit cards rise during and after the holiday season, with the seasonality in delinquencies apparently driven by consumers with subprime credit scores.  These patterns may indicate financial distress among some credit card borrowers at the end of the year.  The CFPB observes that the decline in delinquencies that begins in February and accelerates in March may be attributable to consumers’ receipt of tax refunds and the use of such refunds to pay down debt.

The CFPB released its sixth annual report to Congress on college credit card agreements.  The annual report is mandated by the CARD Act.

The CARD Act requires mandatory reporting to the CFPB by card issuers on agreements with institutions of higher learning or certain affiliated organizations (such as alumni associations).  The information in the report is current as of the end of 2016.

Beginning with its 2014 report, the CFPB’s annual report consolidated its CARD Act-required reporting on college credit card agreements with “other information on financial products offered or marketed to students collected via our various market monitoring tools.”  The CFPB had stated that this consolidation was intended to “further the Bureau’s mandate in a manner consistent with our goal to focus holistically on the suite of issues facing student financial consumers beyond directly financing the costs of their education.”  For that reason, the CFPB “reframed” its 2016 report by titling it an annual report on “Student banking” and using one section of the report to discuss student debit cards and bank accounts and another section to discuss college credit cards.  The 2017 report, which revives the title “College credit card agreements,” abandons that practice and discusses only college credit card agreements.

The CFPB’s findings based on the agreements and related information that issuers are required to submit annually to the CFPB include:

  • Continuing a trend that began in 2009, the number of college credit card agreements, the total number of associated credit card accounts and the amount paid by issuers to schools and affiliated organizations declined again in 2016.
  • Agreements between issuers and alumni associations remained the dominant agreements and alumni associations increased their share of issuer payments.
  • The largest agreements by each of the three metrics of agreement size—year-end open accounts, new accounts, and payment volume—continued to increase their share of the overall market, with the ten most lucrative agreements representing 43% of payments by all issuers.

For several years, the CFPB has used its annual report as an opportunity to take schools to task for not meeting their obligation under the CARD Act to publicly disclose their college credit card marketing agreements (which, pursuant to the Official Commentary to Regulation Z, can be fulfilled by either posting the agreements on a school’s website or by making the agreements available on request, as long as the procedure for requesting the documents is reasonable and free of cost.)  The new report makes no mention of this issue.


The CFPB issued its third biennial report on the credit card market last week.  The report represents the first major report issued by the CFPB since former Director Cordray’s resignation and President Trump’s designation of Mick Mulvaney as Acting Director.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires the CFPB to perform periodic market reviews.  The CFPB’s first CARD Act report was issued in October 2013 and its second report was issued in December 2015.  Unlike those reports, the new report does not identify “areas of concern” or “areas of interest” that create risks for consumers and instead takes an objective approach to the information presented.

Also unlike the prior reports, the new report does not begin with an introductory message replete with editorializing similar to the “Message from Director Corday” that began the prior reports.  In addition, the CFPB’s press release announcing the new report, unlike the CFPB press releases announcing the prior reports, also takes an objective approach by describing several of the report’s key findings and eliminating “sensationalized” headlines or judgmental language suggesting improper industry conduct.  Indeed, rather than adopting a tone that is critical of industry, the CFPB observes in the “Final Note” of the report’s Executive Summary that the quantitative and qualitative indicators discussed in the report “generally suggest a positive picture for consumers in the credit card market” and states that this proposition is supported by direct consumer surveys such J.D. Power’s report “that in 2017 consumers reported their highest level of satisfaction with this market to date.”

The CFPB’s findings include:

  • Most measures of credit card availability have remained stable or increased since the 2015 report, with total outstanding credit card debt now at pre-recession levels and delinquency and charge-off rates showing an increase over the last year.
  • The importance of private label cards and secured credit cards in the non-prime market is growing, with issuers appearing to put increased weight on credit line management as a risk control mechanism.
  • Overall, since 2015, issuers have lowered their daily limits on debt collection phone calls for delinquent credit cards and appear to have pursued more internal collection activity either through in-house or first-party collectors rather than third party collectors, with a majority of issuers now supplementing their internal collection strategy with email use.  Fewer issuers sold debt in 2015 and 2016 than in prior years, with those continuing to sell debts planning to increase their sales of charged-off debt in 2017.
  • More consumers are now engaging with financial products, including credit cards, through digital portals on computers and mobile devices and shop for, originate, and service credit card accounts digitally.

Among the “areas of concern” identified in the 2013 and 2015 CARD Act reports were rewards programs and deferred interest products.  With regard to rewards programs, while the new report notes that the 2015 report “identified a number of area of potential concern regarding rewards card practices” and  “a number of these issues persist,” it states that “progress has been made by others.”  Referencing a letter to the CFPB from the American Bankers Association setting forth principles and practices “that would address at least some of those concerns” if adopted by rewards-cards issuing banks, the CFPB commented that it was “encouraged by efforts to improve the clarity and user-friendliness of rewards cards products and disclosures, and continues to monitor rewards programs closely for opportunities to improve consumer experiences and outcomes.”

With regard to deferred interest, although the CFPB notes in the new report that deferred interest promotions benefit consumers who pay their promotional balance in full within the promotional period but “are more costly for consumers who do not,” the CFPB does not raise concerns about consumers’ understanding of these products as it did in prior reports.  Consumer concerns are only referenced in a footnote in which the CFPB states that although industry contends that deferred interest promotions provide value to consumers, consumer advocates have called for such promotions to be banned or substantially restructured.

In the 2015 report, the CFPB raised various concerns about subprime credit cards, such as their fee structure and the education level of the consumers to whom they were marketed.  Rather than highlighting risks presented by subprime cards, the CFPB describes such cards in the new report as products that “offer [consumers who lack prime credit scores] the dual possibility of access to the credit card market as well as an avenue for building or rehabilitating credit record when timely payments are made.”  The report reviews the products offered by “subprime specialists,” a term that covers “card-issuing banks as well as non-bank program managers that may play a role in designing and servicing credit card products in this segment of the market.”  The CFPB looks at product structure and issuer practices for unsecured general purpose cards, secured general purpose cards, and private label cards, as well as consumer experiences and outcomes in the subprime market.  Also indicative of the CFPB’s change in tone is the following statement in its discussion of secured cards:

“The major risk to consumers using secured credit cards is that of severe delinquency or default.  A consumer who fails to make timely payments on their secured card could find that their attempt to rehabilitate or establish their credit record has failed.  However, the credit reporting consequences of secured card failure are generally no different than for any other credit card.  This risk is the risk all consumers take when they utilize card credit.”

While referring to the issue as a “challenge” rather than an “area of interest or concern,” the CFPB does raise a concern about disclosures in its discussion of digital account servicing, meaning online account servicing portals and smart-phone based account servicing applications.  The CFPB comments that while digital platforms that allow consumers to access and manage their accounts can have clear benefits for consumers and issuers, they “may also present some challenges.”  The CFPB observes that consumers who do not receive paper statements but also do not digitally access their statements, “may not see required disclosures containing certain account information, such as the full picture of the fee burden on an account, or the expected cost of carrying balances over certain lengths of time.”  Noting that the 2015 report found that only 10% of active accounts actually opened an online statement in a given quarter, the CFPB states that, combined with the increasing share of accounts opting out of paper statements, “this means that, for a significant and growing portion of accounts, the account holder does not see account statements at all.”

The new report includes a detailed discussion of third-party credit card comparison (TPC) websites that allow consumers to obtain information about multiple cards.  For purposes of its report, the CFPB looked at TPC sites that are operated by a third party that is not a credit card issuer, are regularly and frequently updated to reflect new product information, display different information in response to user input, and link directly to issuers’ product application sites.  Among the topics discussed in the report are how a consumer interacts with a TPC, the nature of the information provided by a TPC site, and TPC site business practices such as revenue agreements and models, how the cards shown to consumers are selected and presented, and editorial independence.  The report also includes a section on product innovation that discusses how adoption of the Europay, MasterCard, and Visa standard (i.e. “chip” cards) has progressed in the United States, the types of mobile wallets that have seen growth in recent years, developments in the personal installment loan market that have resulted from increasing participation by fintech and other non-bank lenders, and  developments in closed-end point-of-sale lending products.

The report’s objective approach is certainly a welcome change.  The  CFPB’s general satisfaction with the industry, however, does not mean that it will cease to hold issuers responsible for compliance with the consumer financial protection laws, including the Truth in Lending Act and Regulation Z.  While CFPB enforcement activity is likely to decrease under the Trump administration, CFPB supervisory activity is not expected to change significantly.

In addition, Democratic state AGs have indicated that they intend to fill any vacuum created by a less aggressive CFPB approach to enforcement.  State AGs and regulators have direct enforcement authority under various federal consumer protection statutes and, pursuant to Section 1042 of the Consumer Financial Protection Act, can bring civil actions to enforce the provisions of the CFPA, most notably its prohibition of unfair, deceptive or abusive acts or practices.

On February 7, 2018, from 12:00 p.m. to 1:00 p.m. ET, Ballard Spahr attorneys will hold a webinar: Who Will Fill the Void Left Behind by the CFPB?  Click here to register.

The Federal Reserve Board announced that it had issued a Consent Order against Mid America Bank and Trust Company (Bank) for alleged deceptive marketing practices in violation of section 5 of the FTC Act related to balance transfer credit cards issued by the Bank to consumers through independent service organizations (ISO).  The Consent Order requires the Bank to pay approximately $5 million in restitution to nearly 21,000 consumers.

The Bank had acquired portfolios of balance transfer credit cards from other financial institutions.  It had also entered into agreements with ISOs to issue new credit cards in the Bank’s name that consumers could use to pay charged-off or past-due debts purchased by the ISOs.  The new cards were marketed and issued under the same programs used for the cards in two of the portfolios acquired by the Bank.  According to the Consent Order, the Bank engaged in the following deceptive practices in connection with the new cards by failing to do the following in solicitation or welcome letters:

  • Explain that the assessment of finance charges and fees would limit the amount of available new credit even if the consumer made payments on the account.  As a result, consumers could have reasonably believed that by continuing to make timely payments, they would receive credit equal to the amount paid when, in fact, they did not due to the assessment of finance charges and fees.
  • Accurately disclose that participating in the card program would restart the statute of limitations for out-of-statute debt.

The Fed also claimed that in connection with one of the portfolios, the Bank had engaged in deceptive practices because it had stopped reporting cardholder payments to consumer reporting agencies but did not disclose to consumers that it would not report.  It appears the Fed found this to be deceptive because when the cards were issued, the issuing bank had told consumers that reporting to CRAs would be a way for the consumer to build positive payment records.

The restitution payments required by the Consent Order are different for each card program.  For example, for the program involving the statute of limitations disclosure issue, the Bank must refund all payments made by consumers with closed accounts and cancel or waive certain charged off amounts and forgive certain amounts owed by consumers with active accounts.  For the other programs, the Bank must refund or credit certain fees and interest.

It is noteworthy that the Fed did not allege that the Bank failed to provide any required disclosures in connection with the new cards it issued, such as those required by the Truth in Lending Act.  The Consent Order thus illustrates the need for banks to not only review marketing disclosures for compliance with applicable requirements but to also consider whether additional disclosure is needed to address UDAP risk.

For example, in addition to making the restitution payments, the Consent Order requires the Bank to take certain remedial actions, such as disclosing clearly and prominently in any balance transfer credit card solicitation, and on the same page, any representation about credit limits or available credit and the effect of any fees and finance charges on the amount of available credit.  Other federal and state regulators have raised similar UDAP concerns in connection with the marketing of other high fee credit card programs.




The Military Lending Act (MLA) will apply to credit card accounts starting Tuesday, October 3. The final rule took effect last October but provided a one-year exemption for “credit extended in a credit card account under an open-end (not home-secured) consumer credit plan.” Although the final rule permits the Secretary of Defense to extend the exemption for up to one year (October 3, 2018), the DoD declined to do so and is allowing the exemption to expire next week.

The MLA final rule imposes a host of requirements in connection with extensions of “consumer credit” to active-duty servicemembers and their dependents (“covered borrowers”), including a 36-percent cap on the Military Annual Percentage Rate (MAPR), substantive oral and written disclosures, and prohibitions against subjecting covered borrowers to certain contractual terms. In particular, creditors are prohibited by the final rule from including pre-dispute arbitration provisions in consumer credit contracts extended to covered borrowers, a fact that has been overlooked (or ignored) by some proponents of the CFPB’s arbitration rule. As such, even if Congress were to repeal the CFPB arbitration rule using the Congressional Review Act, servicemembers and their dependents who are protected by the MLA would still have the right to take their cases to court.

Credit card issuers should take steps to ensure that they (and their servicers) are prepared to comply with the MLA final rule with respect to credit card accounts opened on or after Tuesday, October 3.

The CFPB has published a final rule regarding various annual adjustments it is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank.  The adjustments reflect changes in the Consumer Price Index in effect on June 1, 2017 and will take effect January 1, 2018.

CARD Act.  The CARD Act requires the CFPB to calculate annual adjustments of (1) the minimum interest charge threshold that triggers disclosure of the minimum interest charge in credit card applications, solicitations and account opening disclosures, and (2) the fee thresholds for the penalty fees safe harbor.  The calculation did not result in a change for 2018 to the current minimum interest charge threshold (which requires disclosure of any minimum interest charge above $1.00).  The calculation also did not result in a change for 2018 to the first and subsequent violation safe harbor penalty fees.  Such fees remain at $27 and $38, respectively.

HOEPA.  HOEPA requires the CFPB to annually adjust the total loan amount and fee thresholds that determine whether a transaction is a high cost mortgage.  In the final rule, for 2018, the CFPB increased the current total loan amount threshold from $20,579 to $21,032, and the current points and fees threshold from $1,029 to $1,052.  As a result, in 2018, a transaction will be a high-cost mortgage (1) if the total loan amount is $21,032 or more and the points and fees exceed 5 percent of the total loan amount, or (2) if the total loan amount is less than $21,032 and the points and fees exceed the lesser of $1,052 or 8 percent of the total loan amount.

Ability to repay/QM rule.  Pursuant to its ability to repay/QM rule, the CFPB must annually adjust the points and fees limits that a loan cannot exceed to satisfy the requirements for a QM.  The CFPB must also annually adjust the related loan amount limits.  In the final rule, the CFPB increased these limits for 2018 to the following:

  • For a loan amount greater than or equal to $105,158 (currently $102,894), points and fees may not exceed 3 percent of the total loan amount
  • For a loan amount greater than or equal to $63,095 (currently $61,737) but less than $105,158, points and fees may not exceed $3,155
  • For a loan amount greater than or equal to $21,032 (currently $20,579) but less than $63,095, points and fees may not exceed 5 percent of the total loan amount
  • For a loan amount greater than or equal to $13,145 (currently $12,862) but less than $21,032, points and fees may not exceed $1,052
  • For a loan amount less than $13,145 (currently $12,862), points and fees may not exceed 8 percent of the total loan amount


The CFPB announced that it sent letters to “top retail credit card companies” encouraging them to use zero-interest promotions instead of deferred-interest promotions.  The CFPB also provided a sample letter and published a new blog on its website for consumers to explain how deferred-interest and zero interest promotions operate and the key differences between them.

In the letter, the CFPB praised the decision of a “major U.S. retailer, in partnership with one of the largest U.S. credit card issuers, to end deferred-interest promotions on its credit card program” and to instead “offer its customers a 0% interest promotion, which is more transparent and carries less risks for consumers.”  In its second biennial report on the credit card market issued in December 2015, the CFPB discussed deferred-interest promotion as one of several “areas of concern for consumers.”  The CFPB references the 2015 report in its letter, particularly the CFPB’s conclusion in the report that its analysis of deferred-interest promotions called into question whether consumers fully understand how such promotions operate.

The CFPB concludes the letter with the observation that “it is important that every consumer fully understands the terms and true costs of promotional financing and is able to confidently make the best choice for his or her unique financial situation.  In recent years, attention to such responsible lending practices has greatly improved consumer trust and satisfaction with the credit card market.”

The views expressed by the CFPB in the letter regarding the risks created by deferred-interest promotions signal increased CFPB scrutiny of such promotions.  Moreover, retailers and card issuers should be mindful of the fact that the CFPB’s first biennial report issued in 2013 seemed to indicate that the CFPB equates the failure to benefit from a deferred-interest promotion with a lack of understanding as to how the program operates.  As a result, retailers and card issuers who continue to offer deferred-interest promotions should carefully review their policies and procedures, promotional materials, and program disclosures and agreements with counsel.

The CFPB has issued its March 2017 complaint report that highlights credit card complaints.  The report also highlights complaints from consumers in Massachusetts and the Boston metro area.  On April 13, 2017, from 12:00 p.m. to 1:00 p.m.ET, Ballard Spahr will hold a webinar, “The CFPB’s Consumer Credit Card Market RFI and Other Important Recent Credit Card Developments.”  Click here for more information and a link to register.

General findings include the following:

  • As of March 1, 2017, the CFPB handled approximately 1,136,000 complaints nationally, including approximately 26,300 complaints in February 2017.
  • Debt collection continued to be the most-complained-about financial product or service in February 2017, representing about 30 percent of complaints submitted.
  • Debt collection complaints, together with complaints about credit reporting and student loans, collectively represented about 62 percent of the complaints submitted in February 2017.
  • Complaints about student loans showed the greatest month-over-month decrease, decreasing 51 percent from January 2017.  According to the CFPB, there was a spike in student loan complaints in January 2017 “around the time the CFPB took a major enforcement action against a loan servicer.”  At the same time, student loans had the greatest percentage increase based on a three-month average, increasing about 429 percent from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017).  In February 2016, the CFPB began accepting complaints about federal student loans.  Previously, such complaints were directed to the Department of Education.  As we have noted in blog posts about prior CFPB monthly complaint reports issued beginning in April 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increasing percentages represented by student loan complaints received by the CFPB most likely reflects the change in where such complaints are sent.
  • Payday loans showed the greatest percentage decrease based on a three-month average, decreasing about 286 percent from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017).  Complaints during those periods decreased from 399 complaints in 2015/2016 to 286 complaints in 2016/2017.  In the February 2017 complaint report, payday loans also showed the greatest percentage decrease based on a three-month average.
  • Montana, Georgia, Missouri, and South Carolina experienced the greatest complaint volume increases from the same time last year  (December 2015 to February 2016 compared with December 2016 to February 2017) with increases of, respectively, 53, 53, 39, and 39 percent.
  • West Virginia, Kansas, and New Hampshire experienced the greatest complaint volume decreases from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017) with decreases of, respectively, 6,  3, and 3 percent.

Findings regarding credit card complaints include the following:

  • The CFPB has handled approximately 116,200 credit card complaints since July 21, 2011, making credit cards the fourth-most-complained-about product, representing 10 percent of all complaints.
  • The most common issues identified in complaints involved billing disputes, particularly disputes involving fraudulent charges.  Consumers complained about the receipt of confusing guidance when notifying their credit card company of such charges and difficulty in having the charges removed even after receiving notice from the credit card company that the dispute was resolved favorably.
  • Consumers complained about problems with rewards programs, such as being unable to take advantage of benefits after meeting program requirements for such benefits and online information that contradicted information received from customer representatives.
  • Consumers complained about the terms of deferred-interest programs, including confusion as to how payments were applied to multiple balances.  Deferred-interest and rewards programs are among the topics on which the CFPB is seeking information in the RFI about the credit card market that it issued last month.
  • Consumers reported issues related to card issuance, such as unsolicited credit cards and problems arising in portfolio conversions from one lender to another.

Findings regarding complaints from Massachusetts consumers include the following:

  • As of March 1, 2017, approximately 20,600 complaints were submitted by Massachusetts consumers of which approximately 15,400 were from Boston consumers.
  • Mortgages was the most-complained-about product, representing 26 percent of all complaints submitted by Massachusetts consumers, which was higher than the national average rate of 24 percent of all complaints submitted by consumers.
  • Average monthly complaints received from Massachusetts consumers increased 19 percent from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017), lower than the increase of 22 percent nationally.


The CFPB announced that it has entered into a consent order with Experian, a consumer reporting agency, for allegedly engaging in the deceptive marketing of credit scores in violation of the Consumer Financial Protection Act’s prohibition against unfair, deceptive, or abusive acts or practices.  The consent order also settles allegations that the company displayed advertisements to consumers before providing free annual credit reports in violation of the Fair Credit Reporting Act.  The consent order requires the company to pay a $3 million civil money penalty to the CFPB.

According to the consent order, Experian developed its own proprietary credit scoring model, which was offered directly to consumers as an “educational” credit score.  The CFPB alleges that the score was not used by lenders despite Experian’s claims that the score provides consumers with the same type of information lenders see.  Despite disclosures accompanying Experian’s marketing materials about the nature of its educational credit score, the CFPB concluded that the disclosures were neither conspicuous nor in close proximity to the deceptive claims.  The consent order dictates the form of future Experian disclosures relating to credit scores by requiring:

For all written communications, and for Internet offers, on each landing page or email where an educational credit score is advertised, ensure that, in the first instance in which the disclosure appears, the disclosure contains a label in a font size double that of the disclosure that says: “What You Need to Know.”

The CFPB is also requiring Experian to collect and review the following data metrics in order to improve its communications with consumers regarding all of its credit score products, not just the educational scores at issue:

  • Key performance metrics, such as Consumer Complaints (both those it receives directly as well as those it receives through other channels, such as the CFPB and State Attorneys General Offices), for evidence of consumer confusion regarding credit scores it offers to consumers; and
  • Empirical data regarding consumer perceptions of Experian’s advertising with regard to the nature of credit scores and the pricing structure of credit scores for evidence of consumer confusion regarding the credit scores it offers to consumers.

The consent order also alleged that Experian required consumers to view advertisements before consumers could receive a free credit report despite a prohibition against such advertising in the FCRA.  The CFPB alleged that the Experian website to which consumers are directed after requesting a file disclosure through contained banner ads and product links, but not the full file disclosure.


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.