[Federal Register Volume 82, Number 46 (Friday, March 10, 2017)]
[Notices]
[Pages 13313-13315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04797]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

[Docket No. CFPB-2017-0006]


Request for Information Regarding Consumer Credit Card Market

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice and request for information.

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SUMMARY: The Credit Card Accountability Responsibility and Disclosure 
Act of 2009 (CARD Act or Act) requires the Bureau of Consumer Financial 
Protection (Bureau or CFPB) to conduct a review (Review) of the 
consumer credit card market, within the limits of its existing 
resources available for reporting purposes. In connection with 
conducting that Review, and in accordance with the Act, the Bureau is 
soliciting information from the public about a number of aspects of the 
consumer credit card market as described further below.

DATES: Comments must be submitted on or before June 8, 2017 to be 
assured of consideration.

ADDRESSES: You may submit responsive information and other comments, 
identified by the document title and Docket No. CFPB-2017-0006, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: FederalRegister[email protected]. Include the 
document title and Docket No. CFPB-2017- 0006 in the subject line of 
the message.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1275 First 
Street NE., Washington, DC 20002.
    Instructions: All submissions should include the agency name and 
docket number for this proposal. Because paper mail in the Washington, 
DC area and at the Bureau is subject to delay, commenters are 
encouraged to submit comments electronically. In general, all comments 
received will be posted without change to http://www.regulations.gov. 
In addition, comments will be available for public inspection and 
copying at 1275 First Street NE., Washington, DC 20002, on official 
business days between the hours of 10 a.m. and 5 p.m. Eastern Time. You 
can make an appointment to inspect the documents by telephoning (202) 
435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: For general inquiries, submission 
process questions, or any additional information, please contact Wei 
Zhang, Credit Card Program Manager, Division of Research, Markets, and 
Regulations, Consumer Financial Protection Bureau, at (202) 435-7700, 
or [email protected].

    Authority:  15 U.S.C. 1616(a), (b).

SUPPLEMENTARY INFORMATION: Section 502(a) of the CARD Act \1\ requires 
the Bureau to conduct a review, within the limits of its existing 
resources available for reporting purposes, of the consumer credit card 
market every two years. To inform that review, section 502(b) \2\ 
instructs the Bureau to seek public comment.
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    \1\ See 15 U.S.C. 1616(a).
    \2\ See 15 U.S.C. 1616(b).
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    The Bureau's first such review was published in October, 2013; the 
Bureau's second such review was published in December, 2015.\3\ To 
inform the Bureau's next review, the Bureau hereby invites members of 
the public, including consumers, credit card issuers, industry 
analysts, consumer advocates, and other interested persons to submit 
information and other comments relevant to the issues expressly 
identified in section 2 below, as well as any information they believe 
is relevant to a review of the credit card market.
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    \3\ CARD Act Report, available at, http://files.consumerfinance.gov/f/201309_cfpb_card-act-report.pdf; The 
Consumer Credit Card Market, available at http://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf.
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1. Background: The CARD Act

    The CARD Act was signed into law in May 2009.\4\ Passage of the Act 
was expressly intended to ``establish fair and transparent practices 
related to the extension of credit'' in the credit card market.\5\ To 
achieve these agreed-upon purposes, the Act changed the requirements 
applicable to credit card pricing in a number of significant respects 
including direct limits on a number of pricing practices that Congress 
deemed unfair or unclear to consumers.
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    \4\ The CARD Act's provisions took effect in three stages: 
August 2009, February 2010, and October 2011.
    \5\ Public Law 111-24, 123 Stat. 1734 (2009).
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2. Issues on Which the Bureau Seeks Public Comment for Its Review

    In connection with its pending Review, the Bureau seeks information 
from members of the public about how the credit card market is 
functioning. The Bureau seeks comments in two primary areas. First, the 
Bureau seeks comments on the experiences of consumers in the credit 
card market and on the overall health of the credit card market, 
including but not limited to those questions explicitly outlined in 
section 502(a) and in (a) through (d) below. Second, the Bureau seeks 
comments on eight areas of further interest, some but not all of which 
were discussed in the previous Review, published October 2013, 
delineated in (e) through (m) below.
    The Bureau wants to be alerted to and understand the information 
that consumers, credit card issuers, consumer groups, and others 
believe is most relevant to the Bureau's review of the credit card 
market, so this list of subjects should not be viewed as exhaustive. 
Commenters are encouraged to address any other aspects of the consumer 
credit card market that they consider would be of interest or concern 
to the Bureau.
    Please feel free to comment generally and/or respond to any or all 
of the questions below but please be sure to indicate in your comments 
on which topic areas or questions you are commenting:

(a) The Terms of Credit Card Agreements and the Practices of Credit 
Card Issuers

    How have the substantive terms and conditions of credit card 
agreements or the length and complexity of such agreements changed over 
the past two years? How have issuers changed their pricing, marketing, 
underwriting, or other practices?

(b) The Effectiveness of Disclosure of Terms, Fees, and Other Expenses 
of Credit Card Plans

    How effective are current disclosures of rates, fees, and other 
cost terms of

[[Page 13314]]

credit card accounts in conveying to consumers the costs of credit card 
plans? What further improvements in disclosure, if any, would benefit 
consumer cardholders at this point, and what costs would be incurred in 
providing such disclosures?

(c) The Adequacy of Protections Against Unfair or Deceptive Acts or 
Practices or Unlawful Discrimination Relating to Credit Card Plans

    Do unfair, deceptive, or abusive acts and practices, or unlawful 
discrimination, still exist in the credit card market, and if so, in 
what form and with what frequency and effect? How might any such 
conduct be prevented and at what cost?

(d) The Cost and Availability of Consumer Credit Cards, the Use of 
Risk-Based Pricing for Consumer Credit Cards, and Consumer Credit Card 
Product Innovation

    How have the cost and availability of consumer credit cards 
(including with respect to non-prime borrowers), the use of risk-based 
pricing for consumer credit cards, and consumer credit card product 
innovation changed since the Bureau reported on the credit card market 
in 2015? What has driven those changes--or, if there has been little 
change, the stability in those metrics? How are consumers with lower 
credit scores faring in the market? Has the impact of the CARD Act on 
these factors changed over the past two years?

(e) Deferred Interest Products

    The Bureau's prior Review found that deferred interest products, 
while popular, can pose risks to consumers. How have market trends and 
issuer practices evolved since the Bureau's prior Review? What areas of 
risk still remain for consumers? What, if anything, should be done to 
address these risks?

(f) Subprime Specialist Products

    The Bureau's prior Review examined the practices and metrics of 
certain ``subprime specialist'' issuers who provide cards to millions 
of consumers with lower credit scores. These issuers offer products to 
consumers distinguished by their high cost and their reliance on fees, 
rather than finance charges, relative to mass market issuers. How does 
the consumer experience of using these cards compare to the experience 
of consumers with similar credit profiles when using mass market credit 
cards?

(g) Third-Party Comparison Sites

    Third party comparison sites are Web sites that provide information 
to consumers about different credit card products in order to 
facilitate the selection of a product. The Bureau has received 
indications that some such sites generate significant revenue from 
issuer payments made in exchange for approved applications, and that in 
many cases contracts between sites and issuers can influence or 
explicitly determine which (and how) products and choices are presented 
to consumers. To what degree do consumers understand the benefits and 
risks of using third party comparison sites? To what degree do existing 
standards, practices, and disclosures protect consumers from unfair, 
deceptive, and abusive acts and practices? Where, if anywhere, do 
opportunities for improvement exist, and how would any such 
improvements most appropriately be realized?

(h) Innovation

    The Bureau's prior Review noted two major trends in financial 
innovation which are poised to substantially impact the credit card 
market. The first was advancements and evolutions in payment security 
and form factor, including both the widespread adoption of EMV 
standards and the possibility for wider adoption of mobile payments. 
The second was the trend toward new consumer lending models potentially 
competing with credit cards, both indirectly by being marketed as a 
tool for debt consolidation and more directly at point-of-sale. To what 
degree, have either of these trends advanced in ways both expected and 
unexpected over the past two years? Which of these trends appear likely 
to have the greatest impact on the consumer credit card market in the 
foreseeable future? What are the benefits and risks to consumers posed 
by these trends? What other innovations are impacting, or are likely to 
impact, consumers in the credit card marketplace?

(i) Secured Credit Cards

    The Bureau believes that secured credit cards potentially offer 
consumers with limited or damaged credit history a beneficial way to 
both access credit and build or rebuild a positive credit record. The 
Bureau has taken note of some indications that secured card 
originations have increased and that new entrants to the market signal 
increasing issuer interest in offering this potentially valuable 
product to consumers. What is the current state of the secured credit 
card market, and what evidence is there to support indications of 
positive consumer outcomes? What obstacles, including regulatory 
obstacles or obstacles with potential regulatory solutions, may prevent 
secured cards from reaching their potential in the marketplace? What 
risks should consumers be aware of when choosing a secured card?

(j) Online and Mobile Account Servicing

    The Bureau's prior Review found that large and increasing numbers 
of consumers are enrolling in issuers' online and mobile account 
servicing platforms. That Review also found that many of those 
consumers have both opted out of receiving paper statements and appear 
to rarely access their statements online. These consumers therefore 
rarely encounter certain mandatory disclosures intended to encourage 
and enable positive outcomes for consumers who have not always had 
positive experiences with credit cards. To what extent are consumers 
who, for example, make only minimum payments, or have a higher 
propensity towards making payments late, not encountering these 
disclosures? What other potential benefits or risks does a broader 
shift towards digital account servicing pose to consumers? What other 
practices or potential innovations are issuers engaging in to 
accomplish the same goals as those disclosures? What obstacles, 
including but not limited to specific regulatory obstacles, inhibit 
issuers from further innovating in leveraging online and mobile account 
servicing platforms to improve consumers' experiences and outcomes 
using credit cards?

(k) Rewards Products

    The Bureau's prior review found that rewards programs associated 
with credit cards are prevalent, popular, and can provide value to 
consumers. That same Review identified areas for concern regarding the 
impact of rewards on consumer choice and usage of credit cards, as well 
as disclosure practices and program structure. How have market trends 
and issuer practices evolved since the Bureau's prior review? What 
areas of risk still remain for consumers? What, if anything, should be 
done to address those?

(l) Variable Interest Rates

    The Bureau's prior Review found that most credit cards now have 
variable interest rates. Those credit card rates will rise when 
background interest rates increase. To what extent are consumers aware 
that their credit card borrowing costs will increase on funds already 
borrowed when market rates increase?

[[Page 13315]]

What common practices are issuers using to inform consumers of such 
rate increases? What practices, if any, should issuers adopt to help 
consumers understand the implications of card use in a rising interest 
rate environment?

(m) Debt Collection

    The Bureau's prior Review examined the policies and practices of 
consumer credit card issuers' collections and debt sales operations. 
What, if any, changes have been made in such policies and practices 
since the last Review? If they have changed, what drove the applicable 
changes? What associated market metrics have changed as a result, and 
how did such changes occur? Have market metrics changed in other 
significant ways, and if so, how and why?

    Dated: March 6, 2017.
Leandra English,
Chief of Staff, Bureau of Consumer Financial Protection.
[FR Doc. 2017-04797 Filed 3-9-17; 8:45 am]
 BILLING CODE 4810-AM-P