SCOPE OF CREDIT CARD ACT BROADER THAN NAME IMPLIES
Despite its title, the recently enacted Credit Card Accountability Responsibility and Disclosure Act of 2009 (“CARD Act”) includes requirements and restrictions that may apply to all open-end consumer credit plans, even if no card is issued on the plan. The provisions that may affect non-card accounts include:
- Section 104, which establishes 5:00 p.m. as the earliest cutoff time for payments.
- Section 106(b) (effective August 20, 2009), which requires creditors to mail statements at least 21 days before (i) the payment due date to treat a payment as late for any purpose or (ii) the grace period expires to impose finance charges based on loss of the grace period.
- Section 201, which requires a revised minimum payment warning and payoff timing disclosures.
- Section 202, which requires disclosure of penalty APRs on periodic statements.
- Section 304, which prohibits card issuers and creditors from offering inducements to college students to apply for or participate in an open-end consumer credit plan at certain locations.
Arguably, Sections 202 and 304 may be read to apply only to credit card accounts. The parts of these provisions applicable to open-end consumer credit plans are surrounded by related provisions expressly limited to credit card accounts, so the omission of a reference to credit cards may have been an oversight.
The other provisions may apply to all open-end credit plans, including, e.g., home equity lines of credit (HELOCs). Section 201, however, likely will not apply to HELOCs. The CARD Act contemplates that the Federal Reserve Board (Board) will issue regulations regarding the minimum payment warning and payoff timing disclosures. Although the Board is not expressly authorized or directed by the CARD Act to create exemptions from these requirements, the Board is authorized by (i) the CARD Act to issue rules as necessary to carry out the Act and (ii) the Truth in Lending Act (TILA) to exempt certain types of transactions from the TILA. The Board has exercised this exemption authority to carve out exceptions for HELOCs and numerous other transactions in the past. For example, the minimum payment warning requirements added to the TILA prior to the CARD Act and implemented in provisions of Regulation Z set to be effective July 1, 2010 would not have applied to home-secured open-end credit plans.
- Judy Scheiderer and