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

Summary

Concerned about anti-consumer practices related to your credit card? Rest assured – if your card was issued by a major institution, it is supervised by the Consumer Financial Protection Bureau.

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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.

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.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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