Compliance Blog

Happy Monday! Tomorrow is Halloween and I am looking forward to going trick-or-treating with my niece and nephew. They are both so excited to dress up and get candy (and I may or may not also be excited to snag a piece from them here and there)!

My compliance Halloween treat is a continuation of my last blog, which can be found here. In that blog, I wrote about submitting credit card agreements to the CFPB. At the end of the blog, I mentioned “that there are a few exceptions to the rule which your credit union may want to review. They are located in section 1026.58(c)(5)-(7) and include the de minimis exception, the private label credit card exception, and the product testing exception.”

Now, for this blog, I wanted to provide some more information regarding one of the exceptions in particular. I recently had a question asking whether there was an exemption for small credit unions. While section 1026.58 does not have an exception based solely on asset size, there is a de minimis exception that may be more likely to apply to smaller credit unions. That exception, located in

section 1026.58(c)(5), states the following:

“(5) De minimis exception.

(i) A card issuer is not required to submit any credit card agreements to the Bureau if the card issuer had fewer than 10,000 open credit card accounts as of the last business day of the calendar quarter.

(ii) If an issuer that previously qualified for the de minimis exception ceases to qualify, the card issuer must begin making quarterly submissions to the Bureau no later than the first quarterly submission deadline after the date as of which the issuer ceased to qualify.

(iii) If a card issuer that did not previously qualify for the de minimis exception qualifies for the de minimis exception, the card issuer must continue to make quarterly submissions to the Bureau until the issuer notifies the Bureau that the card issuer is withdrawing all agreements it previously submitted to the Bureau.” (Emphasis added).

So, if the credit union “had fewer than 10,000 open credit card accounts as of the last business day of the calendar quarter”, then it would not be required to submit any credit card agreements.

The CFPB also has helpful FAQs regarding submitting credit card agreements that mentions the above information:

“Are small credit card issuers exempted from making quarterly credit card submissions to the Bureau?

Regulation Z, 12 CFR 1026.58(c)(5), contains a de minimis exception that exempts certain credit card issuers from making quarterly credit card submissions to the Bureau. To qualify for the de minimis exception, the card issuer must have fewer than 10,000 open credit card accounts as of the last business day of the calendar quarter. Once the card issuer has 10,000 or more open credit card accounts as of the last business day of the calendar quarter, it must begin making quarterly submissions. If a card issuer that did not previously qualify for the de minimis exception qualifies for the de minimis exception, the card issuer must continue to make quarterly submissions to the Bureau until the card issuer notifies the Bureau that the issuer is withdrawing all agreements it previously submitted to the Bureau. See Comment 58(c)(5)-5 to Regulation Z, 12 CFR Part 1026.”

As previously mentioned, the other exceptions to the rule include the private label credit card exception and the product testing exception.

Hope you all have a safe and happy Halloween!

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