Bureau looking into CARD Act effect

Ten years after the Credit Card Accountability Responsibility and Disclosure Act of 2009 was implemented, the Consumer Financial Protection Bureau (CFPB) is looking into the effect of the CARD Act on the industry, small entities and consumers.

The review is part of a statutorily required undertaking in Section 610 of the Regulatory Flexibility Act.

In a release announcing the request for information, the CFPB said it was seeking input on the economic impact of the CARD Act on small entities as well as how the consumer credit card market is performing today.

“In reviewing the economic impact of the CARD Act Rules on small entities, the bureau is seeking to determine whether the regulations should be continued without change or be amended or rescinded,” the CFPB release stated. “In seeking comments on the consumer credit card market, the bureau must conduct a review of the market every two years.”

The review will look for comment in three areas, the CFPB said:

1. The current scale of the economic impacts of the rules as a whole on small entities and of their major components on small entities, including impacts on reporting, recordkeeping, and other compliance requirements.
2. Whether and how those impacts on small entities could be reduced, consistent with the stated objectives of applicable statutes and the rules.
3. Current information relevant to the factors that the bureau is required to consider in completing a section 610 review under the RFA, as described above. Where possible, please submit detailed comments, data, and other information to support any submitted positions.

In addition to the Regulatory Flexibility Act review, the CARD Act itself requires a review every two years of the consumer credit card market, per Section 502(a).

“In connection with its pending review, the bureau seeks information from members of the public about how the credit card market is functioning,” the CFPB stated. “The bureau seeks comments on the experiences of consumers and providers in the credit card market and on the overall health of the credit card market, as outlined in CARD Act section 502(a) and in (1) through (7) below.

“Commenters are encouraged to address any other aspects of the consumer credit card market that they consider would be of interest or concern to the bureau.”

Areas in which the CFPB is soliciting information are:

1. The terms of credit card agreements and the practices of credit card issuers.
   1. How have the substantive terms and conditions of credit card agreements or the length and complexity of such agreements changed over the past two years?
   2. How have issuers changed their pricing, marketing, underwriting, or other practices?
   3. How are the terms of, and practices related to, major supplementary credit card features (such as credit card rewards, deferred interest promotions, balance transfers, and cash advances) evolving?
   4. How have issuers changed their practices related to deferment, forbearance, or other forms of debt relief or assistance offered to consumers?
   5. How have creditors as well as third-party collectors changed their practices over the past two years of collecting on delinquent and charged-off credit card debt?
   6. Has the use of electronic communication (e.g., email or SMS) by creditors and debt collectors in connection with credit card debt grown or otherwise evolved?
   7. How are the practices of for-profit debt settlement companies changing and what trends are occurring in the debt settlement industry? How are creditors and non-profit credit counseling agencies responding to these changes and trends?
2. The effectiveness of disclosure of terms, fees, and other expenses of credit card plans.
   1. How effective are current disclosures of rates, fees, and other cost terms of credit card accounts in conveying to consumers the costs of credit card plans?
   2. What further improvements in disclosure, if any, would benefit consumers and what costs would card issuers or others incur in providing such disclosures?
   3. How well are current credit card disclosure rules and practices adapted to the digital environment? What adaptations to credit card disclosure regimes in the digital environment would better serve consumers or reduce industry compliance burden?
3. The adequacy of protections against unfair or deceptive acts or practices relating to credit card plans.
   1. What unfair, deceptive, or abusive acts and practices exist in the credit card market? How prevalent are these acts and practices and what effect do they have? How might any such conduct be prevented and at what cost?
4. The cost and availability of consumer credit cards.
   1. How have the cost and availability of consumer credit cards (including with respect to non-prime borrowers) changed since the bureau reported on the credit card market in 2019? What is responsible for changes (or absence of changes) in cost and availability? Has the impact of the CARD Act on cost and availability changed over the past two years?
   2. How, if at all, are the characteristics of consumers with lower credit scores changing? How are groups of consumers in different score tiers faring in the market? How do other factors relating to consumer demographics or financial lives affect consumers’ ability to successfully obtain and use card credit?
5. The safety and soundness of credit card issuers.
   1. How is the credit cycle evolving? What, if any, safety and soundness risks are present or growing in this market, and which entities are disproportionately affected by these risks? How, if at all, do these safety and soundness risks to entities relate to long-term indebtedness on the part of some consumers, or changes in consumers’ ability to manage and pay their debts? Has the impact of the CARD Act on safety and soundness changed over the past two years?
6. The use of risk-based pricing for consumer credit cards.
   1. How has the use of risk-based pricing for consumer credit cards changed since the bureau reported on the credit card market in 2019? What has driven those changes or lack of changes? Has the impact of the CARD Act on risk-based pricing changed over the past two years?
   2. How have CARD Act provisions relating to risk-based pricing impacted (positively or negatively) the evolution of practices in this market?
7. Consumer credit card product innovation.
   1. How has credit card product innovation changed since the bureau reported on the credit card market in 2019? What has driven those changes or lack of changes? Has the impact of the CARD Act on product innovation changed over the past two years?
   2. How have broader innovations in finance, such as (but not limited to) new products and entrants, evolving digital tools, greater availability of and new applications for consumer data, and new technological tools (like machine learning), impacted the consumer credit card market, either directly or indirectly? In what ways do CARD Act provisions or its implementing regulations encourage or discourage innovation? In what ways do innovations increase or decrease the impact of certain CARD Act provisions, or change the nature of those impacts?