This week the Consumer Financial ProtectionBureau released study findings complimenting the credit cardindustry for its compliance with the CARD Act. Overlimit fees haveessentially disappeared and late fees collected are less than halfwhat they used to be. Some might argue about any politicalovertones to the announcement and its timing, but I’d suggestaccepting the compliment at face value; the industry had tremendouscompliance challenges posed by the Act and it met those challenges.Not that compliance offered many choices to card issuers, but Istrongly suspect the magnitude of the Act’s implementationchallenge was not widely understood or appreciated outside theindustry, nor was the fact that the challenge occurred in the midstof an unprecedented credit market meltdown given muchrecognition.
But– no rest for the weary. I have commented recently that A.P.R.sare likely in for some scrutiny if not actual regulatory moves. Andone area clearly in the sights of the CFPB as well as otherregulators is transparency of disclosures. After all the industry’sre-tooling of cardholder terms and conditions, most disclosuresusually read like, well, disclosures. Simplicity of disclosuresthat facilitate comparison shopping of cards are likely to be onmany regulatory agendas, including the idea of a standardizeddisclosure format.
At the end of it all, the question still remains as to whethercardholders will notice and actually use disclosure information.Mercator’s CustomerMonitor consumer surveys from 2010 indicatedthat just over half of all consumers were aware of the CARD Act,and among those who were aware and had a credit or charge card, 54%said they now pay more attention to their cardholder agreements,and 41% said they had a better understanding of their credit terms.And this was at perhaps the peak of publicity about the CARD Actand the flow of mailed disclosures to consumers.
Compliance is an ongoing stream that occasionally rages andperiodically ebbs. But having navigated the recent torrent, theindustry should take the compliment.
