The CFPB Wants to Know How Credit Cards Are Working For You

The Consumer Financial Protection Bureau announced this week that is has published a request for information in the Federal Register to ask about the consumer credit card market. It plans to publish a public report to Congress on the state of the consumer credit card market.

With today’s Request for Information, the CFPB is seeking to gather more information on how the credit card market is functioning and the continuing effects of the CARD Act on consumers. Some of the specific areas that the Bureau is requesting information on include:

• The terms of credit card agreements and practices of credit card issuers: The Bureau wants to know how the terms and conditions of credit card agreements may have changed since it conducted its review of the credit card market two years ago. The Bureau is looking to see how card issuers may have changed their pricing, marketing, underwriting, or other practices and whether those changes have benefited or harmed consumers.
  

Unfair or deceptive acts or practices in the credit card market: The Bureau is looking for information on the extent to which unfair or deceptive acts and practices, or unlawful discrimination, may still exist in the credit card market and with what frequency and effect on consumers.

Debt collection practices within the credit card industry: The Bureau is looking for information on the collection of past due amounts on credit card accounts as well as debt collection practices within the credit card industry. Other areas the CFPB is seeking input on include how often card issuers use third-party collection agencies and how those relationships are managed.

Consumer understanding of rewards products: The Bureau is looking for information on how credit card issuers determine that their disclosures for rewards products are being made in a clear and transparent manner, whether consumers understand these offers when applying for rewards credit cards, and how disclosures may be improved to benefit consumers.

As with any request for public comment, the industry should respond and make sure that its voice is heard. Efforts to regulate the financial services market are often undertaken with the best of intensions, but an incomplete understanding of the industry often makes regulators think that regulations are feasible when in fact they would be destructive. As always, the industry should include a strong focus on consumer protection in their comments.

Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
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