WASHINGTON—CUNA and NAFCU are both expressing concerns with the CFPB’s review of the Credit Card Accountability Responsibility and Disclosure (CARD) Act and offering recommendations for where they would like to see changes.
Both trade groups sent separate letters to the CFPB in response to the Bureau’s request for information (RFI) on the current consumer credit card market.
NAFCU is calling on the CFPB to provide additional regulatory clarity, encouraging more efficient disclosure practices, such as granting flexibility when providing required disclosures via online and mobile banking platforms.
To help credit unions develop new and innovative credit products, Andrew Morris, NAFCU’s senior counsel for research and policy, also asked the Bureau tp consider several amendments to the CARD Act rules, including:
- Extending existing flexibility that addresses consumers’ consent to receive disclosures electronically
- Clarifying rules surrounding telephone applications for credit cards
- Updating ability-to-pay rules to better reflect the actual risk of secured credit cards
- Granting consumers additional control over how excess payments are allocated.
‘Not Warranted’
“In the broadest sense, we continue to believe that new rules regarding credit cards are not warranted, unless they replace more stringent rules currently in place, given the industry’s effective self-regulation and the cumulative cost of existing compliance burdens,” added Morris.
On the current consumer credit card market, Morris broke down the role consumer credit cards play in credit union members’ daily lives but noted that “excessive regulation and significant compliance overheard” have made it challenging for credit unions to compete effectively in some areas of the market.
“Despite growing pressure from fintech competitors and the ongoing cost of cumulative regulatory burdens, credit unions continue to put their members first, providing high quality credit card products with lower than average interest rates and member-friendly fee structures,” noted Morris.
Morris recommended that the Bureau ensure credit unions are given flexibility when providing the required disclosures via mobile and digital platforms. In addition, Morris repeated NAFCU’s call for more stringent data security standards for retailers similar to those imposed on financial institutions by the Gramm-Leach-Bliley Act.
CUNA’s Comment
CUNA also said it supports the intent of the Consumer Financial Protection Bureau to eliminate abusive credit card practices but is warning against requirements that would make compliance more cumbersome for credit unions.
“While CUNA continues to support the stated intent of the CARD Act, which is to eliminate predatory credit card practices, we caution against any expansion of regulatory requirements that would make CARD Act compliance more cumbersome for member-owned credit unions,” the letter reads. “The Bureau should focus on ensuring its rules provide meaningful consumer protections while minimizing regulatory compliance burdens on credit unions that already offer fair and sound credit card services to their members.”
CUNA’s letter highlights credit unions’ continued growth in the credit card marketplace and that credit unions remain responsible card providers, “as evidenced by the industry’s low delinquency and charge-off rates,” which remains lower than bank counterparts.
Additional Recommendations
The letter also includes CUNA’s:
- Recommendation the CFPB study methods to improve and simplify disclosures as they relate not only to the consumer but to affected financial institutions
- Support for legislative efforts to create a national data security standard to stem losses from breaches that expose credit card information
- Support for CFPB’s increased efforts to encourage financial innovation in financial services and reiterates CUNA’s call to ensure credit unions are given equal access to CFPB innovation initiatives