The Consumer Financial Protection Bureau recently issued a request for information (the RFI) regarding the consumer credit card market. The CARD Act (Pub. L. No. 111–24, 123 Stat. 1734 (2009)) requires the CFPB to publish a biennial report on the state of the credit card market, and responses to the RFI will inform the CFPB’s findings in its forthcoming 2017 CARD Act report. Past CARD Act reports have served as a roadmap of the CFPB’s concerns and priorities concerning consumer credit cards, and we expect the next report to be equally instructive. Our analysis of the CFPB’s 2015 CARD Act report was provided in a prior PLA post.
Below we compare the 2017 RFI to the 2015 RFI to identify new topics of interest, legacy topics that continue to be of interest, and legacy topics that are no longer specifically addressed by the RFI.
New Topics of Interest
The 2017 RFI includes the following new topics that were not addressed in the 2015 RFI:
- Subprime specialist products –The CFPB seeks information comparing the consumer experience provided by “subprime specialist” credit card issuers, who provide cards to consumers with lower credit scores, with the experience of demographically similar consumers using “mass market credit cards.”
- Third-party comparison sites – The CFPB seeks information regarding the benefits and risks of third-party websites that compare credit card offers and value propositions, and what standards, practices, and disclosures protect consumers using these sites. This new question comes on the heels of a separate RFI regarding third-party use of consumer account information (which we discussed here), reflecting a high level of interest from the CFPB regarding third-party comparison sites and their access to and use of consumer financial data.
- Innovation – The CFPB seeks information on the evolution of credit card innovations over the past two years, including with respect to payment security, form factor improvements such as EMV standards, and new consumer lending models, along with the benefits and risks to consumers from these trends.
- Secured credit cards – The CFPB seeks information on the current state of the secured credit card market, whether there are positive consumer outcomes in this market, and whether obstacles may prevent secured cards from reaching their full potential.
- Online and mobile account servicing – The CFPB seeks information regarding the extent to which consumers may not be encountering required disclosures in online and mobile account servicing platforms, the risks and benefits of the shift to digital account servicing, and the obstacles that may inhibit issuers from further innovating these platforms. The CFPB has expressed concern before that consumers are not obtaining certain mandatory disclosures via online and mobile account servicing platforms.
- Variable interest rates – The CFPB seeks information regarding the extent to which consumers are aware that their credit card borrowing costs may rise once market rates increase, and what steps issuers are taking to inform consumers of such rate increases.
- The cost and availability of consumer credit cards, and the use of risk-based pricing and consumer product innovation – The CFPB seeks information regarding how each factor has changed since the 2015 report, how consumers with lower credit scores are faring in the market, and whether the CARD Act requirements affected these factors in the past two years.
Continuing Areas of Interest
The new 2017 RFI reflects the CFPB’s continued interest in the following topics:
- Credit card issuer practices and the terms of credit card agreements;
- The effectiveness of the disclosures of terms, fees and other expenses;
- The adequacy of protections against unfair or deceptive acts or practices or unlawful discrimination;
- Deferred interest products and their market impact or risk;
- Rewards product innovations and risks; and
- Any changes to debt collection, including changes to market metrics.
Past Topics Not Included in the Current RFI
The CFPB’s 2015 RFI sought information on several topics that were not included in the new 2017 RFI, including:
- Online Disclosures – The 2015 RFI included questions about how disclosures were presented in online and mobile applications. This topic appears to have been broadened in the 2017 RFI to capture not just online disclosures, but online account servicing generally. (See “Online and mobile account servicing” above).
- Grace Periods – The 2015 RFI inquired about the disclosure of grace period limitations and whether consumers were likely to understand those limitations.
- Add-on products – The 2015 RFI sought information regarding the possibly of harmful practices, including unfair, deceptive and abusive acts and practices, associated with add-on products, namely debt protection, identity theft protection, and credit score monitoring. The prevalence of these products has significantly diminished, along with the CFPB’s interest in them.
- Fee harvester cards – The 2015 RFI sought information about fee harvester credit cards, terms on which include large upfront fees.
- Ability to pay – The 2015 RFI sought information on the “ability to pay” standards required under the CARD Act.