.svg)
The Consumer Financial Protection Bureau (CFPB) has launched a public consultation as part of its biennial look into how well the country’s consumer credit card market is functioning.
The review is part of the agency’s requirement under the US CARD Act 2009 and is intended to ensure that consumers are treated fairly and transparently when they use credit via credit cards.
“The CFPB undertakes a biennial review of the consumer credit card market to ensure guidelines and guardrails to protect consumers are working as intended,” said CFPB director Rohit Chopra.
The agency is asking for public input on seven main topics, which will inform its decision on whether there is a need for regulatory changes.
For instance, the agency, which is leading a crusade against hidden financial service fees, or “junk fees”, asks consumers whether they find current disclosures of rates, fees and other credit card cost terms effective.
Additionally, it wants to know what “unfair, deceptive, or abusive acts and practices” exist in the credit cards market.
New financial products, such as buy now, pay later (BNPL) loans, have also been included in the review with the CFPB asking consumers whether and to what extent BNPL loans provide effective alternatives or substitutes for credit cards.
The usage of BNPL has been growing rapidly in the US. In 2021, the five largest BNPL firms extended 180m loans totalling more than $24bn, a nearly tenfold increase since 2019.
In previous statements, Chopra said he considers BNPL loans to be a “close substitute” for credit cards and stressed that he will be working to ensure that the same consumer protection rules apply to BNPL as to credit cards.
Regarding new products, the agency also asks for feedback on the impact of new innovative products, such as rewards redemption for cryptocurrency and environmental causes, or the use of new technologies, such as machine learning.
“This request for information is a meaningful data point that will inform our decision-making on any potential changes, and the CFPB invites consumers, credit card issuers, industry analysts, consumer groups, and the general public to submit information and comments relevant to the topic,” Chopra added.
The agency's previous review, which looked at the market in 2019-2020, generally ended on a positive note after the CFPB found that consumers had used less credit, reduced their debt and the number of late payments fell to historic lows.
It also noted that during the pandemic consumers across all age groups increasingly used digital channels to engage with their financial institutions.
