Credit-card issuers to face new scrutiny by US Consumer Bureau

Bank credit-card fees may face new scrutiny after a 2009 law that revamped regulation of the business, a new report by the Consumer Financial Protection Bureau (CFPB) has announced.

Bank credit-card fees may face new scrutiny after a 2009 law that revamped regulation of the business, a new report by the Consumer Financial Protection Bureau (CFPB) has announced.

Despite reporting a significant fall of total cost of credit card fees and interest payments to US customers after the law implementation, regulators are still looking into whether credit-card issuers treat consumers fairly when they market extras such as identity theft protection and credit monitoring.

The Credit Card Accountability Responsibility and Disclosure Act of 2009, limited lenders’ ability to raise interest rates, curbed late fees and forced lenders to seek customers’ approval to apply over-limit fees, the report explains.

The bureau will examine whether certain cards impose undue fees, and whether issuers adequately disclose terms and conditions.

Regulators also want to look into whether credit card companies make clear disclosures to borrowers who pay their bills online rather than receive a monthly statement.

"According to CFPB research, the 2009 law saved consumers a total of $4 billion in 2012 by cracking down on how late fees and over-limit penalties are assessed. The total cost of credit on the cards, which includes all fees and finance charges, declined by two percentage points," CFPB Director Richard Cordray said in remarks prepared for a hearing the agency is holding in Chicago on Wednesday.

New CFPB action on credit cards could affect major lenders by limiting fees they can collect, or restricting marketing techniques. The six biggest U.S. credit-card issuers are JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc. (C), American Express Co. (AXP), Capital One Financial Corp. (COF) and Discover Financial Services. (DFS)

 

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