Compliance Blog

Posted by Anthony Demangone

Before we take a look at the proposal, I want to take a few minutes to discuss why I care about these proposed amendments to Regulation Z.  I've heard from a number of folks recently, and I can sum up their thoughts this way.

Enough! First, the Fed issues final rules to amend open end rules.  And there's the UDAP rules. Then the CARD Act throws that all out the window.  Then there's a final rule to implement the August 20 deadlines, and now this 841-page proposal appears to be just following the CARD Act.  Why don't we just wait for the final rather than burning brain cells trying to make sense of this proposal?

I feel your pain.  This regulatory process has been one for the books.  I shudder to think how many hours I wasted looking at the UDAP proposal.  My coworker Steve created a wonderful UDAP chart that is now good for...well, I guess you could line a hamster cage with it.  And now we have this 841-page...proposal.  So, we get to do this dance again when they issue a final rule.  So why do we care?

• The Fed's proposal, and ultimately, its final, have to track the CARD Act, which amends the Truth in Lending Act.  But the Fed does have the right to paint outside the lines if it thinks it is necessary to achieve the goals laid out within the Truth in Lending Act.  And they've already done this.  Case in point: the proposal indicates that payment warning requirements will only apply to credit card accounts.  That is good to know.
• The Credit CARD Act simply amends the Truth in Lending Act, which creates a bare-bone set of requirements.  The regs flesh out these requirements.  I always think of it this way: laws say what, while regs say how.
• Finally, the room for maneuvering is very small with this proposal.  Usually, with a rule like this, you'd get a year to implement changes.  This rule, by hook or by crook, will be finalized, with an effective date of February 22.  We have to start planning now.  If not yesterday.

OK, so let's take a look at what the proposal says about double-cycle billing.  Here's the regulatory text that Steve pulled together.

Let me sum up what the guidance says.

Don't do double-cycle billing.

All kidding aside, I don't know that there's much more to say on this one.  Except these two points:

1. If you want a very good example as to what double-cycle billing is, take a look at pages 173-174 of the proposal, which is also available via the link above.  Finally, someone provided an example of double-cycle billing that the average person can understand.
2. You may want to check with your card processor to see if you currently do double-cycle billing as outlined in this proposal.  If they aren't sure, or if they say yes, then I'd dig down into the language a bit more.  But for the most part, double-cycle billing isn't a credit union phenomenon.  Save your focus on provisions that will greatly change your current practices.