Consumers Confused About Credit Card Terms

February 1, 2012

Consumers Confused About Credit Card Terms

In December 2011, the Consumer Financial Protection Bureau (CFPB) issued a report on its first three months of collecting credit card complaint data. CFPB’s Consumer Response Office began with an exclusive focus on credit card inquiries and complaints when it launched on July 21, 2011. It began taking complaints and inquiries related to home mortgages last December. And the bureau expects to handle complaints for all financial products and services by the year’s end.

The report makes three observations about the data that’s been collected so far:

  • Consumer confusion. Many complaints show consumers struggling to understand the terms of credit cards and associated products like debt protection services. These complaints show a mismatch between consumer expectations and the way products function.
  • Third-party fraud. The complaints show some alleged fraudulent credit card charges made by third parties. CFPB obtained some redress for defrauded consumers in these instances, and also consulted appropriate criminal authorities.
  • Factual disputes. Many complaints presented factual disputes between consumer and issuer. CFPB has generally found that issuers have been willing to resolve these complaints.

CFPB also asked the public to comment on its proposed policy for disclosing certain credit card complaint data. It would make available to the public a searchable database containing various data fields for each complaint. CFPB studies how it can efficiently and effectively filter confidential personal information from the complaint data, and invites comment on the proposed policy through the end of the year.

CFPB Tests Prototype Agreement

CFPB launched another “Know Before You Owe” project to simplify credit card agreements. This is the third project in the campaign, which also included efforts to make mortgage and student loan information more transparent.

CFPB asks the public to weigh in on a prototype credit card agreement that is shorter, written in plain language, and explains key features upfront. At press time, CFPB also planned to pilot test the prototype with a credit union to get on-the-ground consumer feedback.

For more CFPB news, visit

Interchange Exclusivity & Routing Deadline Ahead

Don’t forget the Federal Reserve’s Regulation II network exclusivity and routing requirements go into effect for all debit card issuers on April 1, 2012, regardless of asset size.

Regulation II requires a card issuer or payment card network to ensure that debit cards can be processed on at least two unaffiliated networks—one signature and one PIN network—if the card has both signature and PIN capabilities.

Alternatively, an issuer could provide a debit card that can be processed on two or more unaffiliated signature networks, but not on any PIN networks, or that can be processed on two or more unaffiliated PIN networks, but not on any signature networks.

Regulation II also prohibits issuers and payment card networks from limiting a merchant’s ability to choose the network on which a transaction is routed, with respect to those networks on which the debit card can be used.

Next: Bureau Seeks Input on Streamlining Regs

Bureau Seeks Input on Streamlining Regs

CFPB wants public input on how to streamline the consumer regulations the agency inherited under the Dodd-Frank Act from various federal agencies. At press time, CFPB was in the process of republishing these regulations.

The “Notice and Request for Information” CFPB issued asks the public to identify provisions of the inherited regulations that the agency should make the “highest priority for updating, modifying, or eliminating because they’re outdated, unduly burdensome, or unnecessary.” Opportunities to streamline rules and facilitate compliance might include:

  • Simplifying regulations that have become unnecessarily difficult to understand and comply with over time;
  • Standardizing definitions of common terms across regulations where statutes permit;
  • Updating regulations that are outdated or unnecessary due to changing technologies; or
  • Removing unnecessary restrictions on consumer choice or business innovation.

CFPB also wants input on how to make it easier for institutions, especially smaller ones, to comply with the regs. The initial comment period ends March 5, 2012. Commenters will have 30 additional days—until April 3, 2012—to respond to comments received during the initial period.

OFAC Creates Search Tool

The Office of Foreign Assets Control (OFAC) has a new online application that allows institutions to search the Specially Designated Nationals and Blocked Persons List (SDN List) across several criteria.

OFAC regulations require credit unions to block (freeze) property and/or reject transactions involving any country, entity, or individual appearing on the SDN List. 

The new search tool is available at


Q How long must a credit union retain OFAC records?

A All Office of Foreign Assets Control (OFAC) records must be retained for five years. For items that are rejected in accordance with OFAC regulations, credit unions must maintain records for five years from the date of the transaction.

For blocked accounts, credit unions must maintain records for five years after the date that the account is unblocked. In addition, credit unions are required to maintain a full and accurate record of the blocked account for as long as the credit union is holding the blocked property.

Q What should a credit union do if it determines that it has filed incorrect information on a Suspicious Activity Report (SAR)?

A File a corrected report. When correcting an error on a previously filed SAR, mark box 1 (“Corrects prior report”) and follow the directions to make the necessary changes. Whenever a corrected report is filed, the credit union should explain the changes in the SAR narrative. The credit union may need to correct a clerical error, such as an incorrectly reported name or address. Or, it may discover previously undetected suspicious activity related to a previously filed SAR, in which case the date range, dollar amounts, summary characterization and narrative of the original SAR may need to be amended.

Visit CUNA’s compliance blog—“CompBlog”—at Email with questions or ideas for blog posts, and keep the conversation going with your peers on COBWEB, CUNA’s compliance listserv.

Training Calendar 2012

  • Feb. 29: Front-Line Compliance Series: Share Insurance Coverage Issues
  • March 6, 13 & 27: Compliance Fundamentals eSchool
  • March 7: Pressing Credit Union Compliance Issues audio conference
  • April 22-27: CUNA Regulatory Compliance Schools, introduction and update

Visit for program and registration details