The Federal Reserve Board (Board), the Office of Thrift Supervision and the National Credit Union Administration have proposed rules clarifying certain aspects of their December 2008 final rules under the Federal Trade Commission Act prohibiting certain unfair and deceptive acts and practices (UDAP) with respect to credit cards. See 74 Fed. Reg. 5498 (Jan. 29, 2009) (UDAP Rules). The Board also has proposed clarifications to its December 2008 final rule under the Truth in Lending Act (TILA) amending Regulation Z. See 74 Fed. Reg. 5244 (Jan. 29, 2009).

Since publication of the rules, the Agencies have become aware of confusion regarding particular aspects of the rules. To provide guidance and facilitate compliance by the July 1, 2010 effective date, the Agencies propose to amend portions of the rules and the accompanying staff commentary. Key points of clarification include:

  • The applicability of the UDAP Rules to accounts that are closed or acquired by another institution and balances that are transferred to another credit account;
  • Whether and how institutions may continue to provide deferred or waived interest promotional programs (including, e.g., payment allocation requirements in the UDAP Rules and new disclosure requirements under Regulation Z);
  • The meaning of the terms “category of transactions” and “account opening” for purposes of Section __.24(a) of the UDAP Rules, which requires institutions to disclose, at account opening, the annual percentage rates that will apply to each category of transactions;
  • The scope of certain exceptions to the prohibition on APR increases in the UDAP Rule and related disclosure issues under Regulation Z; and
  • Applicability of change-in-terms requirement to changes applicable only to checks that access a credit card account, temporary rate reductions and changes pursuant to specific consumer agreement.

The agencies seek comment on certain discrete issues within 30 days of publication in the Federal Register, which is expected shortly. The Agencies emphasize that the rulemakings are intended to clarify and facilitate compliance with the final rules, not to reconsider the need for – or the extent of – the protections the rules afford consumers. Commenters are encouraged to limit their submissions accordingly. In addition, the Agencies emphasize that institutions should continue planning for compliance with the rules as soon as practicable and, in any event, prior to July 1, 2010.

  • Judy Scheiderer