In the Credit CARD Act of 2009 Congress sought to tame what it viewed as excesses of the credit-card industry. Go here to view the Act's basic reforms.
Since the law went into effect about five years ago, commentators and researchers have tried to assess its effectiveness. Read our prior posts on the topic here, here, here, here, here, here, and here.
Now, the Consumer Financial Protection Bureau has issued this notice calling on the public to provide information so that it can review the law's effectiveness, as required by the Act. The review will culminate in a report.
Here is the agency's statement about the review (in part after the jump):
Today, the Consumer Financial Protection Bureau (CFPB) announced it is seeking public comment on how the credit card market is functioning and the impact of credit card protections on consumers and issuers. This public inquiry will focus on issues including credit card terms, the use of consumer disclosures, credit card debt collection practices, and rewards programs, among others.
“With today’s inquiry, the Bureau is seeking to further understand how the credit card market is working in practice and how credit card protections affect consumers and credit card issuers,” said CFPB Director Richard Cordray. “As we undertake this review, the Bureau wants to ensure it understands the information that consumers, industry, advocates, and other stakeholders believe is most relevant.”
In 2009, Congress passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, with the goal of bringing fairness and transparency to the credit card market. The CARD Act requires that the CFPB conduct a review of the consumer credit market every two years. As part of that review, the Bureau is seeking public comment from consumers, credit card issuers, industry analysts, consumer advocates, and others on the state of the credit card market.
With today’s Request for Information, the CFPB is seeking to gather more information on how the credit card market is functioning and the continuing effects of the CARD Act on consumers. Some of the specific areas that the Bureau is requesting information on include:
- The terms of credit card agreements and practices of credit card issuers: The Bureau wants to know how the terms and conditions of credit card agreements may have changed since it conducted its review of the credit card market two years ago. The Bureau is looking to see how card issuers may have changed their pricing, marketing, underwriting, or other practices and whether those changes have benefited or harmed consumers.
- Unfair or deceptive acts or practices in the credit card market: The Bureau is looking for information on the extent to which unfair or deceptive acts and practices, or unlawful discrimination, may still exist in the credit card market and with what frequency and effect on consumers.
- Debt collection practices within the credit card industry: The Bureau is looking for information on the collection of past due amounts on credit card accounts as well as debt collection practices within the credit card industry. Other areas the CFPB is seeking input on include how often card issuers use third-party collection agencies and how those relationships are managed.
- Consumer understanding of rewards products: The Bureau is looking for information on how credit card issuers determine that their disclosures for rewards products are being made in a clear and transparent manner, whether consumers understand these offers when applying for rewards credit cards, and how disclosures may be improved to benefit consumers.
The CFPB review will culminate in a public report to Congress on the state of the consumer credit card market. The Bureau will use the data gathered to help inform future policy decisions on the topic.