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New Rule Reduces Regulatory Burden on Credit Card Issuers
The Consumer Federal Protection Bureau (CFPB) issued a final rule earlier this year temporarily suspending credit card issuers’ obligation to submit their card agreements to the CFPB, as required under the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act).
The CARD Act, implemented under the Truth in Lending Act (TILA)/Regulation Z, requires issuers of open-end credit cards to send their credit card agreements to the CFPB on a quarterly basis for posting in a public database on its website.
What does the ruling mean?
The suspension became immediate upon the rule’s publication in the Federal Register on April 17, 2015. Under the one-year suspension, credit card issuers are not required to begin submitting credit card agreements to the CFPB until April 30, 2016.
In lieu of providing new and amended agreements and notice of withdrawn agreements for the April 30, 2016, submission, issuers will be permitted to submit to the CFPB a complete, updated set of agreements offered to the public as of the calendar quarter ending March 31, 2016.
Who does the ruling affect?
Under the CARD Act, a card issuer is not required to submit any credit card agreements to the CFPB if:
- It had fewer than 10,000 open credit card accounts as of the last business day of the calendar quarter;
- as of the last business day of the calendar quarter, the agreement is offered under one or more private label credit card plans — each of which has fewer than 10,000 open accounts and is not offered to the public other than for accounts under such a plan; or
- the agreement is part of a product test offered to only a select group of consumers for a limited period of time, is used for fewer than 10,000 accounts, and is not offered to the public other than in connection with such a product test.
Why were the current rules suspended?
The CFPB has stated it will work to develop a more “streamlined and automated” electronic submission system during the temporary suspension. The CFPB contends this will reduce the burden on credit card issuers, and the new automated electronic system will allow issuers to upload agreements directly to its website, rather than the manual submission system currently in place.
Is anything else under the CARD Act affected by this ruling?
Other requirements in Section 1026.58, including the requirement that credit card issuers post their credit card agreements on their own public website, remain unaffected by the temporary suspension.