Source: https://nafcucomplianceblog.typepad.com/nafcu_weblog/credit-cards/
Timestamp: 2019-04-19 02:30:46+00:00

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Last month, I blogged on the timeframes for running promotions on your credit cards. A question then came up regarding whether credit unions have to provide notice when the promotional rate ends and how to handle situations where a member no longer qualifies for a discounted rate, such as an employee preferential rate or a special rate for autopay. This blog addresses the change in terms notice requirements for promotions and discounts that are agreed to after a credit card account is opened and are not provided for in the original card agreement.
In true regulator fashion, getting the answer to this seemingly simple question is not so easy. Once you have figured out where to start, you'll wander through obscure parts of the rule and commentary only to find yourself in a completely different section of the rule. As it can be quite easy to get lost in the maze of cross-references and confusing language, it's helpful to take it one step at a time. So, I'll guide you slowly through the maze and hopefully you won't get lost along the way.
As a starting point, the issue with credit cards is that section 1026.55 generally prohibits credit unions from increasing the rate on a credit card account unless a particular exception applies. When the promotional or discounted rate is first applied to the account, there is no need to worry about this general prohibition since the rate is actually decreasing. However, the commentary explains that this general prohibition also applies to a promotional or discounted rate. Therefore, once the rate has been discounted, credit unions cannot increase that discounted rate back to the original rate unless an exception applies.
For promotional rates, this is pretty straightforward as section 1026.55(b)(1) provides an exception for temporary rates in effect for at least six months. However, it gets a bit more complicated when a member no longer qualifies for a discounted rate. Section 1026.55(b)(3) allows credit unions to increase the rate if it provides advance notice, but there are a couple of twists to this exception. First, it creates a protected balance. This means that all transactions made during the time the rate discount was in place and those transactions made within 14 days of the advance notice must continue to receive that lower rate until the protected balance is paid off. Second, this exception cannot be used during the first year the account is opened. For example, if a member receives a discounted rate for using autopay and then cancels autopay within the first year, the rule prohibits a credit union from increasing the rate until after the first year ends.
Now that we have worked our way through the first part of the maze, let's keep going. Section 1026.55(b)(3) points you to section 1026.9(c) to determine the applicable timeframe and content requirements for the notice. Section 1026.9(c)(2) generally requires a credit union to provide 45-day advance notice when it changes the APR on an account. However, section 1026.9(c)(2)(v) provides a number of exceptions to the general 45-day advance notice requirement. The commentary to this section explains that if the rate is temporarily discounted, a change in terms notice is not required when the rate increases back to the original rate as long as the credit union previously disclosed certain terms. The commentary sends you to a different section of the rule to determine the disclosure requirements – section 1026.9(c)(2)(v)(B).
Section 1026.9(c)(2)(v)(B) requires credit unions to disclose the following: when the reduced APR will apply and the APR that will apply when the reduced APR ceases to apply. If these disclosures are made in advance (e.g. when the credit union offers the discounted rate), advance notice is not required when the member no longer qualifies for the discounted rate. If the disclosures are not made in advance, then the rule requires the credit union to provide notice 45 days before the original rate is imposed. That 45-day advance notice must comply with the content requirements in section 1026.9(c)(2)(iv)(A).
As always, the NAFCU compliance team is here to help you find all your regulatory shortcuts.
Yesterday, the CFPB released its updated lists of rural and underserved counties - 2018 List of Rural or Underserved Counties and 2018 List of Rural Counties. The CFPB has also updated its Rural or Underserved Areas Tool. Credit unions can use these lists and the tool to determine whether a particular property is located in a rural or underserved area. The lists and tool can be found here.
Last week, I had the pleasure of going through the CFPB's credit card agreement database to find my creditor's credit card agreement. This research project was not just for fun… I was specifically looking for similarities in the language financial institutions use to obtain a consensual security interest in their members' or customers' deposit accounts. Seeing just how different credit card agreements can be made me wonder what drive some of the disclosure language and format in this area. So let's review the regulatory requirements to obtain a consensual security agreement for credit cards.
To begin, Regulation Z has a general blanket prohibition against offsetting a member's deposit funds to cover the member's delinquent credit card. See, 12 C.F.R. § 1026.12(d)(1). This means that financial institutions cannot automatically take funds from their customer's deposit account if the customer is delinquent on their credit card.
Make reference to a specific amount of deposited funds or to a specific deposit account number.
12 C.F.R. § 1026, Supp I, 1026.12(d)(2)—1. While the regulation provides examples of how to demonstrate awareness and intent, the appropriateness of the format a credit union chooses will be a question of fact. For example, in reviewing publicly available credit card agreements, it seems that many financial institutions are emphasizing the security lien provision by placing a text box or by highlighting/bolding the security lien provisions. While this is not a manner explicitly stated by Regulation Z, this could be one way to ensure the member is aware and consents to giving the credit union a security lien. As there has been litigation on the sufficiency of these methods, credit unions may want to consult their legal counsel or document providers to ensure the method selected will satisfy the security interest requirements of Regulation Z. For more information on the litigation side of things, see this article published in the 2016 January-February Edition of the NAFCU Journal.
Another thing to note is that unlike the right of offset, credit unions that properly disclose the security interest as outlined above may have a security interest in after-acquired property. See, 12 C.F.R. § 1026, Supp I, 1026.12(d)(2)—2. Meaning, funds deposited after the credit card account is opened are not excluded from the credit union's security interest and these funds could be used to pay for a delinquent credit card.
Finally, credit unions wishing to obtain a security interest in currently opened credit cards may want to look at section 1026.9(c)(2)(i)(A) which requires a change in terms notice at least 45 days prior to the effective date of a significant change in account terms for credit cards. A “significant change in account terms” means “a change to a term required to be disclosed under [sections] 1026.6(b)(1) and (b)(2), an increase in the required minimum periodic payment, a change to a term required to be disclosed under [section] 1026.6(b)(4), or the acquisition of a security interest.” 12 C.F.R. § 1026.9(c)(2)(ii) (emphasis added).
In my opinion, the first Sunday after the Super Bowl is the most depressing day of the year. After months of having every Sunday filled with excitement and record-breaking moments, you suddenly have a day with nothing to do. And that's just depressing. So, I filled my day with a trip to the mall. Pause – I'll give you all a moment to recover from the shock that there's still someone out there who doesn't shop online. . . I always prefer the mall because most of the stores are so desperate to get people in the door that they give you really great discounts that you often can't get online. They all have these colorful signs in the windows advertising discounts on your entire purchase or free gifts with your purchase.
Like any other business, credit unions also use these kinds of flashy offers to attract customers. However, unlike the stores at the mall, credit unions have to comply with a number of different requirements for their offers. From advertising to account opening and beyond, the rules are complex and can be hard to follow. Today's post will focus on the rules for how long credit unions must honor a promotional rate on a credit card. The rules below apply for both new accounts and promotions on existing accounts.
Generally speaking, the credit card rules in Regulation Z prohibit credit unions from increasing the rate on a credit card unless a specific exception applies. One of those exceptions – contained in section 1026.55(b)(1) – allows credit unions to increase the rate after the expiration of a promotional period. The promotional period must be at least six months. Well, that's pretty easy, right? Not so fast. The commentary actually provides two different methods for calculating the promotional period depending on the types of transactions subject to the promotional rate – multiple transactions or one-time transactions.
Multiple Transactions. The first method covers promotional rates that apply to multiple transactions. For example, all purchases made between February and September. Credit unions may limit the types of transactions that qualify for the promotional rate to particular categories – such as all purchases or a balance transfer over $1,000 – or a particular time period – such as all purchase made in December. If the promotional rate applies to multiple transactions, it does not matter how many transactions the member actually makes – as long as multiple transactions qualify for the promotional rate than the first method applies.
On November 1, 2017 the card issuer offers the consumer a 0% rate for six months on purchases made during the months of November and December and states that a 17% rate will apply after the promotion. The following purchases are made: November 15 for $500; December 15 for $300; and January 15 for $150. The card issuer may begin charging the 17% rate on the $500 purchase and the $300 purchase starting on May 1, 2018 as this is six months from November 1. However, the issuer may charge the 17% rate on the $150 purchase beginning on January 15 since it was made after the specified time period.
Example 1: On June 1, 2017, a card issuer offers a 0% APR for six months on the purchase of an appliance and an 18% rate will apply after that. On September 1, 2017 a $5,000 appliance is purchased. The card issuer may begin charging the 18% rate on March 1, 2018 as this is six months from September 1.
Example 2: On June 1, 2017, a card issuer offers the consumer a 5% rate for six months on a balance transfer of at least $1,000 and states that a 15% rate will apply after that. On June 15, a $3,000 balance is transferred to the account. On July 15, a $200 purchase is charged to the account. The card issuer may begin charging the 15% rate on the $3,000 transferred balance on December 15 as this is six months from June 15. However, the card issuer may charge the 15% rate on the $200 purchase beginning on July 15 because this purchase did not qualify for the promotional rate.
When dealing with promotional rates, credit unions will need to first determine whether the promotional rate will apply to multiple transactions or only to one particular transaction. Once the credit union has made this determination, it can determine when the promotional period starts. Determining when the promotional period starts is essential for compliance as the period must run for at least six months.
As compliance folks in the post-Dodd–Frank Era, we sometimes get so caught up with what must be disclosed that it's easy to overlook some of the prohibitions and limitations buried in the consumer regulations. Today's post is a roundup of questions that touch on some of the prohibitions and limitations for open-end credit products.
Our credit union would like to increase the late fee for our HELOCs, are there any regulatory issues with this increase?
Section 1026.40(f)(3) generally prohibits credit unions from changing any term on an open-end home equity plan. The commentary explains that this rule prohibits credit unions from increasing fees and imposing new fees once the plan is opened. This rule covers all the plans terms, not just those terms that must be disclosed under Regulation Z.
The rule does, however, provide a number of limited exceptions to this general prohibition. One of these exceptions allows credit unions to change a term as long as it obtains the member's consent. The commentary further explains that the member must expressly agree to the stated change in writing at the time the change is made and that continued use of the credit plan does not constitute consent.
Section 1026.9(c)(1) requires a 15-day advance notice if the credit union changes any term required to be disclosed under section 1026.6(a). Section 1026.6(a) requires credit unions to disclose all finance charges and any other charges that may be imposed as part of the plan. The commentary to paragraph 6(a)(2) specifically includes late fees as other charges imposed as part of the plan, so advance notice is required. The notice must be in writing and sent to each affected member at least 15 days prior to the effective date of the change.
Our credit union would like to start charging member's a fee for paying their credit card by phone. Can we do this?
For credit card accounts, section 1026.10(e) prohibits credit unions from charging a fee to make a payment by any particular method, including payment by phone. However, if the payment method involves an expedited service by a customer service representative, then credit unions may charge a fee for that payment method. This rule covers both fees charged by the credit union as well as fees charges by a third party that collects or processes payments on the credit union's behalf.
The commentary explains that "expedited" means that the credit union actually credits payment the same day or the next day if the payment is received after the established cut-off time. The commentary goes on to explain that "service by a customer service representative" requires the payment transaction be made with the help of a live representative. An automated system is not "service by a customer service representative," but credit unions may use an automated system for a portion of the transaction as long as a live representative is involved with the transaction.
We heard recently that LIBOR may come to an end sometime in the future. We use the 6-month LIBOR as the index for our variable-rate HELOCs. Can we change to a new index now?
For open-end home equity lines of credit, section 1026.40(f)(3) states that a credit union may change the index on a plan only if three conditions are met: (1) the original index is no longer available, (2) the new index's historical movements are substantially similar to the original index, and (3) the new index and margin will result in a rate substantially similar to the rate in effect at the time the original index became unavailable. The commentary reiterates that the original index must actually be unavailable before a credit union may select a new index.
But what does it mean to "provide" the offer to the member? Is it the day the credit union places the offer in the mail? Or the day the member receives the offer? The MLA is not clear on this point, so some credit unions opt to take a conservative approach and calculate the 60 day window from when the offer is mailed.
Credit unions have also asked about preapproval or prequalification promotions. Note that the carve out is specifically for "firm offers of credit" – and the MLA does not define this term. Of course, "firm offer of credit" is a defined term under the Fair Credit Reporting Act, but this is not cross-applied by the MLA. However, the MLA preamble does reference "prescreened" offers, so the FCRA meaning may at least help when determining the scope of the MLA safe harbor in these cases. Also, the way the provision is written hints at the FCRA prescreen rules, describing offers that are "developed" using certain "criteria." Credit unions will need to determine which promotions are "firm offers of credit" where the covered borrower check would provide a safe harbor for up to 60 days after providing the offer.
Caucus Kickoff. NAFCU's Congressional Caucus starts today. Hundreds of credit union representatives will attend meetings with members of Congress and their staff to advocate on key issues, including regulatory relief. NAFCU also continues to advocate on important issues like the MLA in our constant efforts to create a better environment for credit unions. You can also participate by joining our Thunderclap campaign now to make "protect credit unions" a message that thunders across social media on September 12. By calling on Congress to help protect credit unions, you're ultimately calling on Congress to help America. For information on how your credit union can participate in these kinds of advocacy efforts, check out our Grassroots Action Center.
Another MLA FAQ: Is the Credit Card Rule Retroactive?
Over the past several months, the NAFCU Compliance Team has written a few blogs on various aspects of the MLA credit card rules: Bona Fide Fee Exemption; Late Fees, Returned Payment Fees and More and Researching Call Reports and Card Agreements. With the credit card compliance deadline fast approaching, we continue to receive a number of questions on the MLA and its various credit card rules. Today's blog will focus on one particular issue that has come up for various credit unions lately: whether the rules apply retroactively.
The scenario goes somewhat like this: Jane Member opens a credit card before the compliance deadline. Jane is a covered borrower at the time she opens the credit card and remains a covered borrower throughout the life of the credit card. Does the MLA apply to transactions Jane makes on her credit card after October 3? What if Jane requests an increase in her credit limit after October 3, is the credit card now covered by the MLA?
"The Department proposed to add new subsection (a), stating: “Nothing in this part applies to a credit transaction or account relating to a consumer who is not a covered borrower at the time he or she becomes obligated on a credit transaction or establishes an account for credit.” The Department continues to believe that defining the scope of the regulation to apply only to a covered borrower when he or she enters into a transaction or establishes an account for consumer credit is consistent with the language and structure of 10 U.S.C. 987. Interpreting 10 U.S.C. 987 as applying only to a covered borrower who holds that status when he or she agrees to obtain the consumer credit is fair to the creditor who, at the outset of the transaction, should be in a position to know the status of its counterparty to the agreement." (Emphasis added.) See, 80 Fed. Reg. 43579.
Section 232.12(b) provides a general rule that the definitions, conditions, and requirements of the existing rule apply to transactions involving consumer credit that are consummated or established prior to the compliance date. Relative to the Proposed Rule, the language in § 232.12(b) has been revised to clarify that the “definitions, conditions, and requirements” of the existing rule apply. The Department believes that this provision is equitable, particularly to avoid the potential injustice and operational difficulties that could arise if new requirements under the final rule were to apply to pre-existing transactions or accounts involving consumer credit to covered borrowers. (Emphasis added.) See, 80 Fed. Reg. 43591.
All this together seems to indicate that by “establishing” an account or “extending” credit the DOD was referring to consummation. The preamble discussion indicates that the DOD believes that credit unions are in the best position to determine whether a transaction is covered at the outset and there is no ongoing requirement to ensure the transaction is still not covered. The preamble also explains that the DOD does not expect credit unions to apply the rules retroactively to existing accounts as this may cause unnecessary operational problems. If an account was not covered at consummation, it will not become covered later on.
"A comment on behalf of certain credit card issuers seeks clarification regarding the potential effects of certain 'customer management actions, such as credit line increases.' The Department believes that an action by a creditor within an existing account, such as to increase the available credit that a consumer may draw upon in an account, does not alter the status of the creditor's prior determination for that account." (Emphasis added.) See, 80 Fed. Reg. 43578.
While the DOD specifically includes credit limit increases as actions within an existing account, it does not expand on what other actions may be "within an existing account." Whether other actions, such as adding a joint owner or changing a rate, will trigger MLA protections is unclear from the rule. For these changes, a credit union may need to review its underwriting process and internal procedures to make a determination whether new credit is being extended or a member is becoming obligated on or establishing credit. Some considerations may be whether the credit union performs new underwriting, whether the member will take on any new or different legal obligations, or whether new agreements or disclosures will be provided. The credit union may also want to reach out to its attorney to assist the credit union in making a determination or assessing the particular legal risks involved.
The CFPB is sounding the alarm on deferred interest credit cards. Earlier this month the Bureau issued a letter to retail credit card companies, encouraging them to use more transparent promotional offers.
Citing the results of its 2015 study on deferred interest credit products, the CFPB's letter notes that these promotional products "offer substantial benefits to some consumers, but carry significant costs and risks to others." As an alternative to deferred interest financing, CFPB is encouraging 0% interest offers, which the Bureau believes is more transparent and carries less risk for consumers.
To attract customers and to encourage spending, some private label or store brand credit cards offer deferred interest promotional financing. These types of credit promotions generally offer "0% interest if paid in full" during a set period of time (usually 6 months to a year). During this defined promotional window, consumers who repay the full promotional balance can obtain free financing on the purchase of big-ticket items. But consumers who do not fully repay the balance by the close of the promotional window will find themselves hit with “high, retroactive interest charges” that kick in once the promotional period ends.
We've all seen these offers and have perhaps been enticed into opening a store card to buy a big screen TV or a fancy new dishwasher. So what's the problem?
The CFPB says the issue is primarily a lack of transparency. While deferred interest cards are generally marketed to consumers as "no interest" promotions, in actuality, interest starts accruing from the date of purchase and is retroactively added back on top of the remaining principal if the consumer does not pay the full promotional balance by the end of the defined window. Keeping in mind that the regular interest rates on these store brand cards tend to run around 25%, consumers may be hit with a substantial lump sum interest charge when the promotion period ends. Because the costs of deferred interest financing are not evident until the end of the promotion, consumers are often surprised to have incurred this unanticipated interest charge.
The CFPB is concerned that consumers do not fully understand how deferred interest promotions operate and how interest is assessed on these products. Exhibit A: The CFPB's 2015 study found that a large portion of consumers who failed to repay their full promotional balance before the end of their deferred interest deadline actually paid off the full promotional balance and the lump sum interest charge shortly after the promotion expired. This certainly seems to support the CFPB's suspicion that consumers are either unable to understand the back-end pricing features that characterize these products, or to effectively manage deferred interest promotions in a way that they may avoid paying interest.
The Bureau's concerns are even more pronounced for subprime borrowers and other at-risk consumers. According to the CFPB’s 2015 study, subprime or deep subprime consumers fully repay their balances within the promotional period only about 50% of the time. Meanwhile, consumers with prime or super-prime scores pay off their promotional balances almost 90% of the time. The CFPB's letter also notes that consumers suffering financial hardship—for example, individuals experiencing job loss or facing an unexpected medical expense—are particularly vulnerable to incurring "an unexpectedly large lump-sum financial cost."
This is not the first time the CFPB has raised concerns about deferred interest credit cards; the Bureau has been signaling its aversion to these types of products for years. (See, CFPB’s 2015 study; this blog; that enforcement action.) However, the CFPB's letter is expressly encouraging retail card companies to replace deferred interest promotions with 0% promotions, clearly indicating that it views deferred interest products as "high-risk." While the letter indicates that programs with "robust compliance management systems and third-party oversight measures," may support the successful implementation of a deferred interest program, the CFPB offers little additional guidance on what a compliant program might look like.
Time will tell if the Bureau will follow its ongoing pattern of regulating through enforcement, by pursuing greater enforcement action relative to deferred interest cards.
Good news for credit unions: President Trump has designated Acting NCUA Board Chairman J. Mark McWatters as the tenth Chairman of the NCUA Board, effective June 23.
McWatters was nominated to the NCUA Board by then-President Obama on January 7, 2014. He joined the NCUA Board on August 26, 2014 following his confirmation by the Senate. He has been serving as Acting Board Chairman since January 23.
The Consumer Financial Protection Bureau (CFPB) has been updating and adjusting threshold dollar amounts for transactions covered under Regulation Z (which implements the Truth in Lending Act) and Regulation C (which implements the Home Mortgage Disclosure Act) since the middle of last year. As most threshold adjustments became effective as of January 1st, 2017, we thought it would be helpful to gather this information in a one-stop shop.
Regulation Z prohibits a card issuer from imposing a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) plan unless the fee “represents a reasonable proportion of the total costs” incurred for the violation, or is within the safe harbor provision of 12 C.F.R. section 1026.52(b). If a credit card issuer charges anything up to the safe harbor amount for certain violations, it is considered to be in compliance with Regulation Z.
$38 for each subsequent late payment over six months.
8 percent of the total loan amount for a loan less than $12,862.
Regulation Z sets additional requirements for high-cost mortgages. To be considered a high-cost mortgage, the transaction must be secured by the consumer’s principal dwelling and the APR and loan amount have to be over a certain threshold. For 2017, the total loan amount will be increased to $20,579 and the loan’s points and fees must exceed 5% of the total loan amount. See, 12 C.F.R. § 1026.32(a)(ii). Loans below $20,579 will also be high-cost if the points and fees exceed the lesser of 8% of the loan amount or $1,029.
Creditors making higher priced mortgage loans must escrow the borrower’s property taxes and insurance unless the credit union meets certain exceptions. Credit unions with an asset size of less than $2.069 billion (increased from $2.052 billion in 2016) that extend a covered loan for a property that is located in rural or underserved areas and meet other requirements are exempt from establishing escrow accounts. See, 12 C.F.R. § 1026.35(b).
Higher-priced mortgage loans are considered to be higher risk and hence require that the credit union obtain a written appraisal based on a physical visit to the home’s interior.12 C.F.R. § 1026.35(c)(3)(i). The rule contains a few exceptions for the appraisal requirement including for transactions of less than an amount adjusted annually, which will remain the same as last year, $25,500.
For more information on Regulation Z’s 2017 adjusted thresholds, see the CFPB’s rule in the Federal Register or their press release.
HMDA exempts small credit unions from reporting HMDA data for the following year, using a multi-prong test that includes an asset threshold. There is no change from last year’s asset size exemption. So in 2017, credit unions with assets at or below $44 million as of December 31, 2016 will continue to be exempt from collecting and reporting HMDA data in 2017. See, 12 C.F.R. § 1003.2 (Financial Institution)(2).
Modifications to the Technology Preview, Filing Instructions Guide for data collected in or after 2018, and Frequently Asked Questions (FAQs).
Happy Holidays! My name is André Cotten, and I recently joined NAFCU as a Regulatory Compliance Counsel. Prior to NAFCU, I worked as a Senior Associate with PwC’s Financial Services Risk and Regulatory practice in the New York City office. I am loving my Regulatory Compliance Team, and I look forward to interacting with all of you.
We previously blogged about the NCUA’s Incentive Compensation Rule. The previous post discussed the 3 NCUA rules that limit incentive compensation practices: Section 701.21(c)(8) which restricts practices in connection with lending activities; Section 701.23(g) which places limits on compensation relating to the sale or purchase of eligible obligations; and Section 721.7 which addresses compensation related to incidental powers.
Today’s post expands on the regulatory guidance for incentives pursuant to the recently released bulletin from the Consumer Financial Protection Bureau (CFPB). On November 28, 2016, the CFPB issued a compliance bulletin providing direction on detecting and preventing consumer harm from production incentives. The Bureau discusses some specific instances of risks to consumers from incentives and the CFPB’s expectations.
Financial services companies routinely accomplish business objectives through programs that tie outcomes to certain benchmarks. If an incentive program is properly implemented and monitored, the incentives can benefit both the consumer and financial entity as well as the financial marketplace as a whole. For instance, financial services firms will be able to attract and retain top-performing talent, and consumers would benefit from enhanced customer service and exposure to products or services that are beneficial to their financial objectives.
Incentive programs are commonly found in the cross-selling of products and services to existing consumers, sales to new customers, sales at higher prices where pricing discretion exists, quotas for customer calls completed and collections benchmarks. Financial services firms may apply these production incentives to both employees and service providers. The risks these incentives may present to consumers are significant if poorly monitored. The CFPB bulletin also describes compliance management actions that its supervised entities should take to mitigate risks.
In light of the recent enforcement action against Wells Fargo, the CFPB is particularly keen to the culture of “unrealistic, high-pressure targets” that incentive programs can create. If incentive programs are not carefully and properly implemented and monitored, they may encourage overly aggressive marketing, sales, services and collections tactics.
Incentive programs without sound compliance monitoring may lead to blatant violations of Federal consumer financial law. Other risks to the financial services institution may include public enforcement, supervisory actions, private litigation, and reputational harm.
Negative effects on consumer credit scores.
Unrealistic quotas to sign consumers up for financial services may incentivize employees to achieve this result without actual consent or by means of deception.
In short, the CFPB expects a robust, comprehensive compliance management system (CMS) that will utilize incentives to institute effective controls and oversight. The more strict controls will be necessary where incentives (i) apply to products or services less likely to benefit consumers or have a higher potential for consumer harm, (ii) reward outcomes that may not align with consumer interests, or (iii) involve a significant portion of an employee or service provider’s compensation. The CFPB does not mandate a particular CMS structure, and the Bureau recognizes that structures will vary based on the size and complexity of an organization.
A robust compliance program starts with the “tone from the top” set by the board of directors and management. The “tone from the top” is effectuated through policies and procedures, training, monitoring and corrective action. According to the CFPB Bulletin, a supervised entity’s corrective actions should include the termination of employees, severance of relationship with service providers, changes to the structure of incentives, additional training, and reimbursement of funds to all affected consumers.
For more information pertaining to the oversight of incentive programs, please review the CFPB’s Supervision and Examination Manual and Chapter 7 of the NCUA’s Examiner Guide.
On Monday, December 5th, the Federal Reserve released its latest issue of Consumer Compliance Outlook. This issue provides an overview of the Regulation E requirements for foreign remittance transfers. The publication also contains revised interagency questions and answers regarding community reinvestment, regulatory updates, and federal court opinions.
Over the Thanksgiving holiday break, I received my second bar license and was admitted to practice law in my home-state of Mississippi.
This time of year usually drums up incidents of unauthorized transactions and subsequent error disputes from consumers to recoup their money. Shoppers ran to their favorite retailers with their debit and credit cards in tow, to catch those alluring Black Friday, Small Business Saturday, and Cyber Monday sales. And it’s not over! Christmas and more holiday sales are still underway. Indeed, shoppers are busy…and so are the fraudsters.
Generally, cardholders who are victims of unauthorized transactions will notify the credit union of an error and may obtain a refund from the credit union. If the credit union determines that the cardholder’s request is valid, it will withdraw funds that were previously deposited into the merchant’s bank account and return the money to the member. This post will remind credit unions how to process error disputes under Regulation E (for debit cards) and Regulation Z (for credit cards).
Regulation E, section 1005.11 governs the error resolution procedures for electronic fund transfers (EFTs) like ATM or debit card transactions. Section 1005.11(a)(1) provides the types of errors covered by the rule, which includes “unauthorized electronic transfers”. An unauthorized electronic transfer is one that is initiated by a person other than the member without authority to initiate the transfer.
A credit union’s obligation to investigate is triggered once it receives a written or oral notice of an error from the member. The notice must be received by the credit union no later than 60 days after delivery of the periodic statement on which the alleged error is first reflected. The notice must comply with the content requirements set forth in 1005.11(b). If the credit union receives an oral notice, the credit union may require the member to give written confirmation within 10 business days of the oral notice. See, 12 C.F.R. §1005.11(b).
After the credit union receives a timely notice from the member, the credit union must conduct an investigation. Section 1005.11(c)(1) requires a credit union to investigate and determine whether an error occurred within 10 business days of receiving the notice and to report the determination to the member within 3 business days. Moreover, the credit union is required to correct the error within 1 business day after determining that an error occurred. The 10-day investigation period may be extended to 45 days, if the credit union provisionally credits the member’s account in the amount of the alleged error within 10 business days of receiving the notice. However, provisional credit can be withheld if the credit union requires, but does not receive, written confirmation within 10 business days of an oral notice of error. Lastly, the 45 days may be extended to 90 days if the unauthorized electronic funds transfer resulted from a point-of-sale debit card transfer. See, 12 C.F.R. §1005.11(c).
Credit unions often ask us if they are allowed to require affidavits or police reports from members who report unauthorized use of their debit card. Regulation E does not permit a credit union to require documentation such as affidavits or copies of police reports as a requirement to start an investigation. Rather, as explained above, the regulation requires the credit union to start the investigation as soon as it receives notice (oral or written) of an error. My colleague Stephanie Lyon wrote a great blog on this topic earlier this summer.
So even where there is unauthorized use on the car, a member may be held liable if he/she fails to timely notify the credit union. Under Regulation E, there are three possible tiers of member liability for unauthorized EFTs depending on the situation. A member may be liable for: (1) up to $50; (2) up to $500; or (3) an unlimited amount, depending on when the unauthorized EFT occurs. Specifically, the $50/$500 tier and the amount of liability imposed will be based on whether “timely notice” was given to the credit union. See, 12 C.F.R. §1005.6.
If the member notifies the credit union within two business days after learning of the unauthorized use, the member's liability is capped at $50. If the member fails to notify the credit union within two business days, the $500 liability cap applies. Also, note that if the member’s delay in notifying the credit union was due to extenuating circumstances, the two-day limit must be extended. The commentary to the rule explains that extenuating circumstances include travel. This is worth highlighting, as many people travel during the holiday season and this may come up as a reason for not notifying the credit union sooner. The member can also be subject to unlimited liability if the member fails to notify the credit union within 60 days.
Notably, under Regulation E, negligence is not a factor in determining a consumer’s liability for unauthorized EFTs under Regulation E. So whether the member was silly for shopping on a seemingly suspicious website, or was irresponsible for leaving her debit card in the fitting room while trying on some new items, is irrelevant.
Lastly, credit unions should be aware that the liability rules described above may be different for VISA/Master Card purposes. In late 2014, the card networks adopted zero liability provisions as applied to debit and ATM cards, thus VISA and MasterCard branded debit cards may be subject to different liability provisions. Credit unions are advised to consult with the credit card network’s rules for compliance purposes.
Regulation Z, section 1026.13 governs billing error resolution for credit cards. Similar to Regulation E, Regulation Z, section 1026.13(a) defines the types of errors covered by the rule, which also includes an unauthorized use of the card. See, 12 C.F.R. §1026.13(a)(1). Unlike Regulation E though, another error covered by the rule would be where a member alleges that, while the transaction was authorized, the good or service was not received, or it was received but not in the form he/she agreed to. See, 12 C.F.R. §1026.13(a)(3). This may happen where Member A ordered a flat screen TV from Amazon, and although it may have shipped, it was never received by the member; or even more funky, the member order a 32” flat screen but only received a 26’’ flat screen. The commentary gives other examples, such as when the member refuses to take delivery of goods because they did not comply with the contract; or the wrong quantity was delivered; or the delivery was late.
Unlike, Regulation E where a notice of error can be oral or written, a credit union’s obligations under Regulation Z are triggered once it receives a billing error notice in writing. Like Regulation E, the notice must be received by the credit union no later than 60 days after delivery of the periodic statement on which the alleged error is first reflected. See, 12 C. §F.R. 1026.13 (b).
The credit union is generally required to mail or deliver written acknowledgment to the member within 30 days of receiving a billing error notice, and to resolve the error no later than 90 days after receiving the billing error notice from the member. See, 12 C.F.R. §1026.13(c). The rule establishes error resolution procedures where: (i) the billing error occurred as alleged by the member; and (ii) a different billing error or no billing error occurred. If the credit union determines that a billing error occurred as claimed by the member, the credit union would be required to correct the error and credit the member's account in the amount disputed, and mail or deliver a correction notice to the consumer within 90 days of receiving the notice of error. See, 12 C.F.R. §1026.13(e).
Regulation Z does not have the same 10-day provisional credit requirement as Regulation E. Although there isn’t a provisional credit requirement, note that the credit union cannot try to collect the disputed amount while conducting its investigation. See, 12 C.F.R. §1026.13 (d)(1)(emphasis added).
Lastly, it’s worth highlighting that under Regulation Z, 12 C.F.R. §1026.12, a member has the right to assert certain claims and defenses against the credit union concerning property or services purchased with a credit card, if the merchant was unwilling to resolve the dispute; that is, as against the credit union, the member can assert any claims or defenses that can be asserted against the merchant. So going back to our flat screen TV example, if the member disputes the receipt of the item with Amazon, and Amazon fails to resolve the issue, the member can assert certain any claims against the credit union. Moreover, the member would be permitted to withhold payment up to the amount of credit extended for that television. See, 12 C.F.R. §1026.12(c).
In addition to Regulation E and Regulation Z, the credit union may also need to consider card association rules (i.e. MasterCard and Visa) because they have some specific contractual requirements dealing with provisional credit that may be more beneficial to the member than the regulatory minimums. Accordingly, the credit union would need to review those rules for provisions governing provisional credit.
Regulation Z defers to Regulation E’s liability provisions where the error dispute claimed is for the unauthorized use of a credit card involving an EFT. See, 12 C.F.R. §1005.12(g). Notably, there aren’t any regulatory provisions that govern member liability in the situation that doesn’t involve unauthorized use, i.e., where the member makes a dispute concerning an undelivered item.
Again, don’t forget about those Visa/Master Card rules. In addition to Regulation E and Regulation Z liability provisions, the credit union may also need to consider the card association rules, namely the zero liability provisions.
The use of credit cards and debit cards will be prevalent this holiday season, and with the rise in cyberattacks and other fraud schemes, we may see an uptick in error disputes in the upcoming months.
I know this was a lot of information, but it’s real out there! Oh, and if you hadn’t had enough, on Wednesday, the Federal Reserve Board published a report containing information on debit card transactions in 2015, including information on fraud losses. The report states that debit card fraud losses increased by 44 percent from 2013 to 2015. See, I told you it’s real!
As always, if you have any questions relating to this issue or any other general concerns, feel free to reach out to your NAFCU compliance team. We’re here for you!
Last month, the Payment Card Industry Security Standards Council released an update to its data security standards, version 3.2. The new version of the Payment Card Industry Data Security Standard (PCI DSS) will replace the current version, version 3.1, which is set to expire on October 31, 2016.
At NAFCU compliance, from time to time, we receive general questions on PCI compliance. While no one at NAFCU holds themselves as PCI Compliance expert, I wanted to answer some general PCI questions that the compliance team frequently receives, as well as highlight some of the changes to version 3.2.
PCI DSS is an information security standard for organizations designed to ensure certain intuitions process, store, or transmit credit card information. This standard provides operational requirements to protect card data against unauthorized access, use, or disclosure. PCI DSS is administered by the Payment Card Industry Security Standards Council, which is an organization founded by the major credit card brands (MasterCard, Visa, American Express, Discover, etc.).
Who must comply with PCI DSS?
PCI is a contractual compliance requirement issued by the major card brands. PCI DSS generally applies to all entities involved in payment card processing, including merchants, processors, acquirers, issuers, and service providers as well as all other entities that store, process, or transmit cardholder data and/or sensitive authentication data. Credit unions may be both merchants, if the credit union allows cash withdrawals from credit cards at the teller line, and service providers, if their member’s credit card information stored on their systems.
What Does Version 3.2 Change?
According to the PCI press release on version 3.2, the primary changes are clarifications on requirements that help organizations ensure critical data security controls are in place, monitored, and effectively tested. Nevertheless, the updated PCI DSS changes are significant.
One major change to PCI DSS is that version 3.2 implements a multi-factor authentication process for all personnel with non-console administrative access and all personnel with remote access to the cardholder data environment. Another major change affects requirements for entities using Secure Socket Layer/early Transport Layer Security for encrypted data transmission, and the integration of Designated Entities Supplemental Validation assessment.
Credit unions that meet the definition of service providers will want to pay particular attention to the new requirements imposed on them. For example, service providers will be required to maintain a documented description of the cryptographic architecture, detect and report on failures of critical security control systems, and perform reviews at least quarterly to confirm personnel are following security policies and operational procedures. Requirements 3.5.1; 10.8; 12.11. In addition, executive management is now responsible for the protection of cardholder data and PCI DSS compliance. Requirement 12.4.1.
For a high-level overview, the Payment Card Industry Security Standards Council released a summary of the changes from version 3.1 to version 3.2. The summary places changes into three different categories: (1) clarifications to existing rules, (2) additional guidance, and (3) “evolving requirements” (updated or new requirements). Credit unions should note that “evolving requirements” have an effective date of February 1, 2018. Credit union’s that are required to conduct PCI compliance should carefully review this document to determine how the new version affects their security standards. Other resources available to credit union's include a quick reference guide, a version 3.2 resource guide, a PCI FAQ database, a guide on migrating from SSL and Early TLS, and a version 3.2 high-level webinar. The Security Standards Council also has a blog, which provides some background commentary on the changes.
Recently, a member asked about the timing involved in providing notice of an APR increase following a 60-day delinquency on a credit card account. The member knew that the notice needed to be sent 45 days prior to the increase, but was not sure whether it could be sent 15 days after delinquency, allowing the APR to be increased on the 61st day of delinquency, or if the 60 days needed to pass before it could be sent at all.
I wasn’t sure either, so I started to dig.
“§1026.55 Limitations on increasing annual percentage rates, fees, and charges.
(b) Exceptions. A card issuer may increase an annual percentage rate or a fee or charge required to be disclosed under §1026.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) pursuant to an exception set forth in this paragraph even if that increase would not be permitted under a different exception.
(ii) A rate is increased as a penalty for one or more events specified in the account agreement, such as making a late payment or obtaining an extension of credit that exceeds the credit limit.
(Emphasis added.) This feels like an answer, because it says the creditor shall provide the notice AFTER the occurrence of the events. But the events it references are those “described in paragraph (g)(1)(i)" of section 1026.9... not section 1026.55. Section 1026.9(g)(1)(i) says nothing about 60 days’ delinquency. The language of (g)(1)(i) is merely the “consumer’s delinquency or default.” The consumer is typically “delinquent” following the expiration of their grace period. However, it seems strange that section 1026.9(g) would allow a notice of a rate change to be sent following a delinquency of one day, when a delinquency of 60 days is the minimum before section 1026.55 would allow the rate to actually be changed.
That tells us nothing! So the commentary to section 1026.9(g) points you to the commentary to section 1026.55(a), for more information about how to comply with sections 1026.9(g) and 1026.55(b).
“B. Account becomes more than 60 days delinquent after provision of §1026.9(g) notice. Same facts as above except the payment due on June 15 of year two has not been received by August 15. Section 1026.55(b)(4) permits the card issuer to apply the 28% penalty rate to the $1,500 purchase balance and the $200 purchase because it has not received the June 15 payment within 60 days after the due date. However, in order to do so, §1026.55(b)(4)(i) requires the card issuer to first provide an additional notice pursuant to §1026.9(g). This notice must be sent no earlier than August 15, which is the first day the account became more than 60 days' delinquent. If the notice is sent on August 15, the card issuer may begin accruing interest on the $1,500 purchase balance and the $200 purchase at the 28% penalty rate beginning on September 29.” (Emphasis added.) See 12 C.F.R. Part 1026, Supp. I, comment 1026.55(a)-1.iii.B.
Greetings compliance fans! With the Federal Open Market Committee (FOMC) largely expected to announce an increase in the federal-funds rate today, many of you may be wondering what obligations credit unions have under federal law to inform members should rates on some variable-rate products increase. This blog post covers some of those questions by taking a look at NCUA’s Truth in Savings Rule and Regulation Z.
Before diving into these rules, keep in mind that share accounts and consumer credit plans are, at their base, contracts between a credit union and its membership that may be subject to various state and federal requirements outside of the scope of either Truth in Savings or Regulation Z. When contemplating a change in interest rates, the credit union’s agreement with the member will determine when the credit union can change rates on existing accounts.
TIS rules regarding subsequent disclosures require 30 calendar days’ advance written notice for some changes to share accounts. However, section 707.5(a)(1) explicitly exempts variable-rate changes. Moreover, the rule only requires disclosure of changes that are adverse to the interests of the member. Therefore, an increase in the dividend rate and corresponding annual percentage yield would not be required to be disclosed in advance.
For open-end consumer credit plans, such as credit cards, unsecured loans, and home equity plans, Regulation Z does not require credit unions to provide members with change-in-terms notices before rate increases under properly disclosed variable-rate plans. 12 C.F.R. § 1026.9(c)(2)(v)(C). For this exception to the advance written notice requirement to apply, the rate change must be based on a publicly available index that is not under the credit union’s control. Official Interpretations of Regulation Z state that an index is publicly available if the member can independently obtain and use it to verify the annual percentage rate applied to the account.
The commentary provides examples of certain circumstances where the index will be considered to be under a credit union’s control such as when the index is the credit union’s own prime rate or cost of funds. Another example is where the contract specifies a rate floor that does not permit the variable rate to decrease consistent with the index. It is worth noting, however, that the commentary does allow a rate ceiling that does not permit the variable rate to increase beyond a certain threshold. Finally, an index will be considered to be under a credit union’s control where the credit union has the authority to pick the index to be used.
The commentary also notes that the change must be as a result of a change in the index, and not a change in the margin used to determine the variable rate. For example, changing the margin from LIBOR + 2.50% to LIBOR + 3.00%, would not be considered an increase “due to the index” and therefore would require additional disclosures. For credit card accounts, changing the margin would also trigger the member’s right to reject the proposed changes.
For adjustable-rate mortgages (ARMs), Regulation Z requires credit unions to provide disclosures in connection with the adjustment of interest rates that result in corresponding adjustment to the payment. 12 C.F.R. § 1026.20(c). The disclosures should be provided to members at least 60 days but no longer than 120 days before the first payment at the adjusted level is due. For ARMs with uniformly scheduled rate adjustments, such as an adjustment every 60 days, credit unions must provide disclosures at least 25 days but no more than 120 days before the first payment at the adjusted level. This rule also applies to ARMs originated prior to January 10, 2015 in which the adjusted interest rate and payment are calculated based on a date that is less than 45 days prior to the adjustment date.
It is important to note that changes that occur within the first 210 days of the closing do not trigger advance notice requirements because homeowners will have received notices of the change at closing. 12 C.F.R. § 1026.20 (d). However, if the first adjustment to an ARM occurs within 60 days of consummation and the new interest rate disclosed at consummation was an estimate, the disclosures must be provided to members as soon as practicable but no less than 25 days before the first payment at the adjusted level is due.
Cats and Christmas Trees: My wife and I recently put up our Christmas tree. While doing so, Hazel, the younger of our two cats decided that she wanted to help out. We adopted her from Meow Stories, a local cat rescue in Fredericksburg, VA and haven’t been happier. Her brother, Max, seems pleased to have a friend in his own haughty, cat-appropriate way.
The CFPB is required to annually adjust certain threshold amounts within various provisions of Regulation Z based on inflation. While it’s not the most exciting task, it has to be done. That said, on September 21, 2015, the bureau published a final rule implementing a few of these adjustments under the CARD Act, HOEPA, TILA, and the Dodd-Frank Act. The rule modifies the credit card penalty fee safe harbor, the HOEPA total loan amount and fee trigger thresholds, and the loan amounts for specific points and fees limits under Regulation Z’s qualified mortgage rule. These amounts are adjusted, where appropriate, based on the annual percentage change reflected in the Consumer Price Index in effect on June 1, 2015. The following will outline the adjustments of several provisions in Regulation Z, effective January 1, 2016. However, the minimum interest charge disclosure thresholds will remain unchanged in 2016.
Card Act Under section 1026.52(b), fees on credit card accounts must generally be based on costs, but the rule contains safe harbor amounts that are considered compliant. The new safe harbor for a member’s first late payment will be $27 and $37 for subsequent late payments within the same six month period. Credit unions should note that while the first late payment fee remains unchanged, subsequent payments within the six month period decreased by $1 dollar to $37.
HOEPA Under section 1026.32(a), for purposes of determining the total loan amount threshold that determines whether a transaction is a high cost mortgage when the points and fees are either 5 percent or 8 percentis $20,350. This is an decrease from the current $20,391 figure. Additionally, for purposes of determining whether a consumer credit transaction that is secured by a consumer's principal dwelling and is not otherwise exempt is covered by § 1026.32 a loan is covered if the points and fees exceed $1,017 or 8 percent of the total loan amount, whichever is lower. This is a decrease from the current $1,020 figure.
TILA Under section 1026.43(e)(3), for purposes of determining whether a covered transaction is a qualified mortgage, a covered transaction is qualified when: the transaction's total points and fees do not exceed 3 percent of the total loan amount for a loan amount greater than or equal to $101,749; $3,052 for a loan amount greater than or equal to $61,050 but less than $101,749; 5 percent of the total loan amount for loans greater than or equal to $20,350 but less than $61,050; $1,017 for a loan amount greater than or equal to $12,719 but less than $20,350, and 8 percent of the total loan amount for loans less than $12,719. Credit unions should note that these are all increases from the current figures.
The CFPB’s final rule can be found here.
The Board's Federal Register notice can be viewed here. For more information on NACHA’s same-day ACH, check out this blog post.
Back when I was new to compliance, I wish there had been a “compliance officer 101” type of resource. There are so many regulations that compliance officers need to be aware of, including -- TILA/RESPA Integrated Disclosures, Regulation B, Regulation CC, Regulation D, Regulation DD, Regulation E, Regulation J, Regulation P, Regulation V, Regulation X, Regulation Z, and UDAAP -- just to name a few. Oh yea, and then there is the E-SIGN Act, too! You can’t forget about those electronic disclosures. With all of these regulations, how do they all work in tandem? And then there are policies, which ones require board approval?
Whether you’re new to compliance and share my rookie-days sentiments, or are a seasoned compliance officer, we’re working on a new electronic resource to help you navigate your way through the regulatory-compliance land of credit unions.
My question to you – what did you use when you were brand new to compliance? Or are you still looking for that perfect resource to help you with your day-to-day compliance needs?
CFPB Issues Interpretive Rule on Homeownership Counseling Requirements. The CFPB issued a final interpretive rule, amending its 2013 guidelines, to assist lender compliance with RESPA and TILA homeownership counseling requirements.
Under RESPA, credit unions must provide applicants for a federally related mortgage loan with a clear and conspicuous written list of certified homeownership counselors. 12 C.F.R. 1024.20(a)(1). RESPA states a credit union may use one of two methods for generating the required list. First, a credit union can use a tool developed and maintained by the CFPB. Second, a credit union can use data made available by the CFPB or HUD, provided the data are used in accordance with instructions provided with the data. 12 C.F.R. 1024.20(a)(1)(ii). The interpretive rule describes instructions for credit unions to use in complying with the second method for generating a list. The interpretive rule addresses the number of counselors that must appear on a list of counselors (according to the CFPB, listing ten housing counseling agencies ensures fairness among housing counseling agencies), the use of zip codes to generate a list of counselors, counselor contact information, and combining the list of counselors with other discourses.
TILA prohibits a credit union from making a high-cost mortgage loan (as defined by HOEPA) unless it receives written certification that the member has obtained mortgage counseling from an approved counselor. The interpretive rule clarifies the qualifications necessary to provide high-cost mortgage counseling, and provides guidance on the issue of credit union participation in counseling.
With regard to the credit union’s participation in counseling, it is the CFPB’s position that “counselor independence and impartiality, which the anti-steering provision seeks to preserve, may be adversely affected by a concern that another counselor may be selected or the content of the counseling influenced if the counselor requests that the [credit union] not listen to the counseling and the [credit union] does not agree.” See final interpretive rule page 12. Therefore, the interpretive rule states that credit unions will “comply with the anti-steering provision if a counselor is allowed to request that the creditor not participate or listen on the call.” Id. However, the CFPB is not enacting a prohibition on credit union’s participation, as the CFPB states that a “counselor ... is allowed to request that a [credit union] participate in a call or a portion of a call.” Id.
CFPB Finalizes One-Year Suspension of TILA Requirement for Quarterly Submission of Credit Card Agreements. Last week the CFPB issued a final rule adopting a one-year suspension of its own regulation that requires certain credit card issuers to send their credit card agreements to the CFPB each quarter. Under the final rule, credit card issuers will not be required to submit agreements that would otherwise have been due to the CFPB by the first business day on or after April 30, July 31, and October 31 of 2015, and January 31, 2016. The suspension does not affect the requirement for issuers to post their credit card agreements on their own publicly available websites. 12 C.F.R. 1026.58(d).
The rationale behind the suspension of quarterly submissions is so the CFPB can develop a more streamlined and automated electronic submission system. In its statement, the CFPB said the new system should enable faster posting of new and revised agreements on its website.
Credit card issuers must resume submitting credit card agreements on a quarterly basis to the CFPB starting on April 30, 2016. In lieu of providing new and amended agreements and notice of withdrawn agreements for the April 30, 2016 submission, issuers are 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. See comment 58(c)(1)-3.
Proposed Suspension of Credit Card Agreement Submissions. On February 24th, the Consumer Financial Protection Bureau (CFPB) issued a proposal to temporarily suspend the Truth in Lending Act’s (TILA) requirement that credit unions submit credit card agreements to the CFPB on a quarterly basis. See 12 C.F.R. 1026.58(c). Under this rule, credit unions must provide the CFPB with their credit card agreements every quarter unless the card agreement continues to be offered and has not been amended. Keep in mind that the rule contains exceptions for certain private label cards and those credit unions with fewer than 10,000 open credit card accounts, and the proposal would not impact these exceptions.
The CFPB intends to create and test a new platform that would be faster and easier for credit unions to use for submissions as well as improve the bureau staff’s own management of the sizeable workload that is created by this rule. The CFPB expects an improved process would improve the bureau’s ability to keep its database updated and accurate. In the interim, the CFPB would collect card agreements from large financial institutions’ public disclosures made in accordance with 12 C.F.R. 1026.58(d) and upload these agreements to its own public database.
However, this proposal would not impact the rule’s requirements for a credit union to post its credit card agreements publically on the credit union’s website. NAFCU plans to submit comments supporting the suspension of this rule, and would like to hear from our members regarding any issues or concerns with the current submission process. Comments are due to the CFPB by March 13th, so please share your experiences by contacting Alicia Nealon, NAFCU Director of Regulatory Affairs, at anealon@nafcu.org.
NCUA Field of Membership (FOM) Webinar. On Wednesday, March 25th at 2 PM, NCUA will host a free webinar on “Successful Strategies for Field-of-Membership Expansion.” Topics will include using data to maximize membership growth, business plan templates to assist with applying for FOM expansion, and a review of NCUA’s FOM internet application. A federal credit union will also participate and share its experiences with FOM expansion. To participate in this webinar, register here.

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