WASHINGTON– The Consumer Financial Protection Bureau has issued a compliance assistance sandbox (CAS) approval order to Synchrony regarding its proposal to develop a “dual-feature credit card.”
The card is designed for consumers with a limited or damaged credit history as a tool that can be used to establish or reestablish a favorable credit history, according to the CFPB. The Bureau said Synchrony intends to offer a lower rate on secured use with the opportunity for eligible accountholders to graduate to unsecured use after 12 months. The terms of both secured use and unsecured use will be disclosed at the opening of the dual-feature credit card account. The terms will then be redisclosed with the opportunity to opt-in to unsecured use.
Issued under the CAS Policy from last year, the CFPB said a CAS approval offers an entity confronting regulatory uncertainty a “safe harbor” from liability under specified legal provisions.
“Entities are offered safe harbor for specified conduct that the Bureau finds compliant with those legal provisions, subject to good faith compliance with the terms of the approval,” the CFPB said. “The CAS Policy implements the existing safe harbor approval mechanisms provided under the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, or—as in this case—the Truth in Lending Act. The duration of the approval in this case is three years.”
A copy of the CAS approval order issued to Synchrony can be found here.