Expert Q&A

How safe is your credit card from anti-consumer practices?

The Fine Print with Fred Williams

Fred O. Williams is senior reporter for A business journalist since 1987, his work has appeared in Kiplinger’s Personal Finance magazine, the Buffalo News and USA Today.

How safe is your credit card from anti-consumer practices?

Banks over $10 billion in assets are subject to examination by the Consumer Financial Protection Bureau in addition to safety and soundness oversight by banking agencies:

  1. Federal examiners flag anti-consumer practices and sometimes generate refunds for affected customers. 
  2. Complaints against the supervised banks are handled by the CFPB and made public on the internet, providing another check on misbehavior.
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If your credit card issuer is supervised by the federal government’s consumer protection bureau, that gives you an extra layer of protection from misleading advertising, discrimination in lending, unfair dispute resolution and an array of other problems.

The consumer bureau issues examiners a 123-page manual for credit card accounts. The guide requires scrutiny of common problem areas.

For example: 

  • Descriptions of “fixed” interest rates must also describe the term of the fixed rate period, for example.
  • Also, deferred interest promotions touting “no interest” must also display prominently the qualifier “if paid in full” within a certain period.

    See related: 12 consumer protections in the Credit CARD Act

    How CFPB bank supervision works

    Unlike enforcement crackdowns, supervisory actions are not publicly reported. However, refunds and credits are issued to consumers via the supervisory efforts.

    • In the first half of 2017, supervisory actions generated $14 million for 104,000 consumers, the agency reported in September 2017, without naming the banks and other financial companies targeted.
    • Among the recipients of refunds were credit card users who were steered to costly pay-by-phone services when lower cost – or free – alternatives were available.

    What type of banks are supervised by CFPB

    Under the Dodd-Frank Act, card-issuing banks with over $10 billion in assets are subject to oversight by examiners from the CFPB. Currently that encompasses 133 banks and their affiliates.

    A proposal in Congress would raise the threshold to $50 billion in assets, which would cut the number of banks supervised to fewer than 50.

    However, the proposal did not make it into the broad Dodd-Frank rollback that passed earlier this year and enacted by the White House on May 24.

    “Considering the success the CFPB has had in fighting for consumers, it is troubling that H.R. 1264 would essentially exempt a large part of the banking industry from the CFPB’s supervision,” Scott Astrada, of the Center for Responsible Lending, told a congressional hearing in January.


    Tip: Unsure as to whether your bank is supervised by the federal government? Check the most recent list of financial institutions under supervision by the Consumer Financial Protection Bureau.

    Credit card issuers supervised by CFPB

    Most recent list of CFPB-supervised banks, based on their size at the end of the first quarter of 2018:

    Consumer complaint records under CFPB are public online

    Banks subject to supervision have another check on their practices: Their consumer complaint record is publicly available on the internet.

    The CFPB handles gripes about the supervised banks and publishes the complaint, as well as the company’s response, on its consumer complaints website.

    The good news for credit card users is that more than 90 percent of the market is covered by CFPB supervision. That’s because the card market is dominated by the largest players, such as American Express, Chase and Citi, whose size puts them well over the CFPB supervision threshold.

    But thousands of smaller institutions are exempt from CFPB supervision – including all but a handful of credit unions.

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