Compliance Blog

Written by Ricardo Piñeres, Regulatory Compliance Counsel

CFPB Warns Credit Card Companies Against Deceptively Marketing Promotional Offers.  In a bulletin released last week, the Consumer Financial Protection Bureau (CFPB) warned credit unions, and other credit card issuers, against deceptively marketing interest-rate promotions.  The CFPB issued the bulletin because of the Bureau’s concerns regarding the marketing practices of some card issuers, especially with regards to promotional rates and balance transfer offers.

According to a press release that accompanied the bulletin’s release, “[t]he Bureau believes some companies’ marketing materials do not clearly disclose that consumers must pay off the promotional balance by their due date to avoid racking up unexpected interest charges on routine purchases for which they were not charged interest previously. For some consumers, these surprise charges can make the cost of transferring a balance more expensive than revolving the same balance on their existing card.”

After a brief discussion regarding the CFPB’s reasons for releasing the bulletin, the bulletin discusses: the risks of deceptive advertising practices; the risks of abusive practices; and Regulation Z’s disclosure requirements.  Furthermore, the bulletin has a final section that states the Bureau’s expectations for credit card issuers, as follows:

“The Bureau expects credit card issuers to incorporate into their compliance management systems adequate measures to prevent violation of Federal consumer financial laws, including the Dodd-Frank Act’s prohibitions on unfair, deceptive, or abusive acts or practices.  Consequently, credit card issuers are expected to implement internal controls sufficient to ensure that they market promotional APR offers in a manner that limits the risk of statutory or regulatory violations and related consumer harm.  These steps should include, but are not limited to, ensuring that:

• All solicitations, applications, account-opening materials, and convenience checks comply with the requirements in Regulation Z;
• All marketing materials clearly, prominently, and accurately describe the material costs, conditions, and limitations associated with the offers; and
• All marketing materials clearly, prominently, and accurately describe the effect of promotional APR offers on the grace period for new purchases.”

In addition to the bulletin and the press release, the CFPB also hammered home their perspective with a consumer-facing post on the Bureau’s blog.  The blog post warned consumers to be on the lookout for deceptive advertisements regarding promotional rates, and also warned consumers on the implications of losing the protections of the grace period.

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Free Kick.  My wife and I just got back from a great week on vacation in the city of my birth – Cartagena, Colombia.  While there, we were lucky to get to watch Colombia’s friendly against Brasil on television.  Sadly, Neymar found enough magic on a free kick to give Brasil a 1-0 victory.  That being said, watching the match at a restaurant in Cartagena reminded me of why I fell in love with football.  It may have only been a friendly, but it seemed like every other person was wearing a national team jersey and the city came to stop for those two hours while people were glued to the game cheering on their Seleccion Colombia.  It was an absolutely wonderful way to cap off a summer that brought me so much joy after having not seen Mi Seleccion in a World Cup since 1998.  I can’t wait to see wait the next four years under Jose Pekerman bring to Colombia.  In the meantime, here are two videos from Colombia’s World Cup opener that still give me goose bumps: Colombian National Anthem and Caracol Highlights.

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Farewell.  This will be my final blog post here at the NAFCU Compliance Blog.  While I have decided to leave the NAFCU Compliance team in order to head back to the government relations field, I have thoroughly enjoyed these past eight months of covering compliance hot topics and providing my take on the wonderful world of football.  It has also been a pleasure providing compliance advice to the many of you that have called or emailed with compliance questions.  I leave behind some great colleagues here at NAFCU Compliance, and I thank them for sharing their knowledge, thus making me a better attorney.  Lastly, I also want to thank all of the readers of this blog.  It has been so much fun interacting with you and trading perspectives on the beautiful game and sharing in the excitement of a truly incredible World Cup.