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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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On July 15, 2009, the Federal Reserve Board (Board) published an interim final rule amending Regulation Z to implement the two provisions of the recently enacted Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) that take effect August 20, 2009. The provisions are:

  • Section 101(a), regarding advance notice of rate increases and other changes; and
  • Section 106(b), which establishes the 21-day rule for mailing of periodic statements.

The rules generally revise Regulation Z and its Official Staff Commentary as they exist today (and not the versions that will take effect next July) to provide guidance on compliance with Sections 101(a) and 106(b). Among other things, the rules clarify that the CARD Act requires creditors to provide an opt out for any interest rate increase (including application of a penalty rate to an account) and changes in terms. The Board has anticipated certain other changes scheduled to be effective February 22, 2010 and July 1, 2010, thus accelerating the effect of other CARD Act and amended Regulation Z rules.

In addition, the interim rules clarify timing issues that have raised compliance concerns for creditors. The Board explained that the relevant date for determining whether the new requirements apply generally is the date on which the notice or periodic statement is provided, not the effective date of the change or the due date or grace period expiration date reflected on the statement. Thus, creditors do not need to send 45-day rate increase notices or implement the new timing requirements for periodic statements mailed or delivered in advance of the August 20 effective date.

The Board also outlined its plans for implementing the CARD Act. The Board will issue rules on the remaining provisions of the CARD Act, which go into effect on February 22 or August 22, 2010, in stages. To the extent appropriate, the Board intends to use its January 2009 credit card rules and the underlying rationale as the basis for its rulemakings under the CARD Act. The Board also intends to retain those portions of its January 2009 Regulation Z Rule that are unaffected by the CARD Act, but likely will amend or withdraw rules that are inconsistent with the CARD Act in the next stage. The Board will consider comments received on the May 5, 2009 proposed clarifications and technical amendments and incorporate final clarifications and amendments as appropriate.

Comments on the interim final rule may be submitted within 60 days after publication in the Federal Register, which is expected shortly. The Board will consider the comments in connection with its next rulemaking.

Contact us for more information on the interim final rule.

  • Judy Scheiderer