The Consumer Financial Protection Bureau published their supervisory highlights for 3Q2021. The credit card industry withstood the regulatory gamut well. The CFPB’s press release sounded as if issues were pervasive, when CFPB Director Rohit Chopra said: “Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic… We will continue to supervise firms to halt harmful practices before they become widespread.”
But credit cards appeared in good regulatory standing.
There were no enforcement actions against major credit card issuers for the entire 2021 year to date, as detailed on the CFPB’s running list of enforcement activities.
The supervisory report highlights three citations for billing resolution, which fall under Reg Z and two for deceptive practices:
Billing Error Resolutions:
12 C.F.R. § 1026.13(c)(2) by failing to resolve a dispute within two complete billing cycles after receiving a billing error notice regarding the failure to credit a payment that the consumer made.
12 C.F.R. § 1026.13(e)(1) by failing to reimburse a consumer for a late fee after the creditor determined a missing payment had not been credited to the consumer’s account, as the consumer had asserted.
12 C.F.R. § 1026.13(f) by failing to conduct reasonable investigations after receiving billing error notices related to a missing payment and unauthorized transactions.
Deceptive Marketing of Credit Card Bonus Offers:
Examiners found that credit card issuers engaged in deceptive acts or practices by advertising to certain existing customers that they would receive bonus offers if they opened a new credit card account and met certain spending requirements. A consumer could reasonably conclude that an issuer would perform according to the plain terms of its advertisement.
Examiners also found that the credit card issuers engaged in deceptive acts or practices by advertising to other consumers that they would receive certain bonuses if they opened new credit card accounts in response to the advertisements and met certain spending requirements. The issuers, however, failed to disclose or adequately disclose that consumers must apply online for the new credit card to receive the bonus.
Both issues require staff training and media attention.
Things were less rosy for mortgage services where the CFPB stated:
Mortgage servicers charged improper fees to borrowers enrolled in CARES Act forbearance
Examiners found fair lending violations
And outside of cards and mortgages:
Remittance providers failed to investigate notice of errors in timely fashion
Payday lenders improperly debited consumer bank accounts
In an industry that measures volumes in the trillions of dollars, transactions in the billions, and cardholders in the hundreds of millions, it is safe to grade the card industry with an “A-” when it comes to consumer protections this year.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
