On March 10, 2017, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued a request for information regarding the consumer credit market (the “RFI”). Section 502 of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “CARD Act”) requires the CFPB to conduct a biennial review of the credit card market, which the RFI is designed to inform.
The RFI seeks comment on topics related to how the credit card market is functioning. The topics included in the RFI may shed light on the Bureau’s future policy making and enforcement priorities in the credit card market. Comments are due by June 8, 2017.
As part of the CFPB’s review of the credit card market every two years under section 502 of the CARD Act, the CFPB must evaluate the following topics:
- credit card terms and issuer practices;
- the effectiveness of consumer disclosures;
- the adequacy of protections against unfair, deceptive acts or practices; and
- how the CARD Act and its implementation have affected:
(a) the cost and availability of credit, especially to non-prime borrowers,
(b) the safety and soundness of issuers,
(c) the use of risk-based pricing, and
(d) consumer credit card product innovation.
The RFI also seeks information about nine additional topics that the Bureau is not required to evaluate under the statute:
- Deferred interest products
- Subprime specialist products
- Third-party comparison sites
- Innovation, including chip-card technology and mobile payments
- Secured credit cards
- Online and mobile account servicing
- Rewards products
- Variable interest rates
- Debt collection
The Bureau’s proposed evaluations of deferred interest products, rewards products, and third-party comparison sites are noteworthy because each evaluation suggests the Bureau may consider further action to address its concerns in the area.
- The CFPB has long warned consumers about the risks of deferred interest credit cards, including in the 2015 CARD Act Report. In the RFI, the CFPB seeks information on changes to the market for deferred interest products since 2015, what risks remain for consumers, and what steps should be taken to address those risks.
- The 2015 CARD Act Report found that credit card rewards programs had become prevalent in the market, and identified concerns the Bureau had, including that issuers may not communicate key terms and conditions clearly to consumers, making it difficult to compare the value of different programs. The RFI seeks information on how the market has changed since 2015, what risks remain, and what the CFPB should do to address those risks.
- In the RFI, the CFPB expresses concern that some third-party comparison sites, which allow consumers to compare credit card offers, are being paid by issuers and that such payments may influence what information the web sites may display to consumers. The Bureau seeks information on whether consumers understand the benefits and risks of these sites, whether consumers are protected from unfair, deceptive, or abusive acts or practices, and where there are opportunities for improvement.