CUNA Provides Warnings for Credit Card Issuers as the Holiday Shopping Season Ramps Up
in Compliance & Regulatory

The Credit Union National Association (CUNA) shared an eye-opening piece Thursday, on information from the Consumer Financial Protection Bureau Supervisory report that may be revelatory to credit card issuers.  CUNA wrote that as “consumers everywhere are whipping out those plastic cards to purchase gifts for friends and family, card issuers are easily tempted to begin offering various promotions to entice cardholders to use their card products this holiday season.  With this in mind, it is important to be aware of common compliance pitfalls that can accompany credit card promotions.”

CUNA shared several areas of noncompliance pertaining to credit cards that credit unions should be aware of, found in the recent CFPB Supervisory reports, the Bureau has reported:

  • Deceptive marketing practices when it comes to credit cards, especially credit card add-on products, has been a main source of UDAAP enforcement activity over the years. If you are targeting consumers over the phone, be sure you are upfront and honest about the terms and conditions of the product or service you are selling, do not hide or misrepresent the member's eligibility to qualify for the product or service, and do not make any misrepresentations about the fees associated with the product or service.  (For an excellent example of what NOT to do, see this consent order).
  • Do not forget to send account opening disclosures! Failure to do so is a violation of Regulation Z, so be sure to send the tabular disclosures required to be provided at account opening.
  • Also beware of tricking consumers into expensive pay-by-phone fees. The Bureau is concerned about companies potentially misleading consumers about the purpose and amount of certain pay-by-phone fees or keeping them in the dark about much cheaper payment options (see this bulletin for more info)
  • Lastly, beware of any trigger terms in open-end credit advertisements! Remember that certain terms such as the periodic rate, finance charge accrual timing, the balance computation method, finance charge calculations, and other charges trigger additional required disclosures.  Make sure that all of your advertisements are Reg Z compliant!

CUNA went on to say that these are just a few things to keep in mind if you are offering credit card promotions not just during this peak shopping season, but any time of year.  No one wants to end up with a compliance violation, so be mindful of your credit union's marketing practices.