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The Credit CARD Act of 2009 – Four Years Later

By · August 23, 2013 · 2013 Ark. L. Notes 1488
In categories: Administrative Law, Business Law, Debtor/Creditor, Extended Article, Financial Institutions Law, Practice Tips

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “Credit CARD Act”), 1 was signed into law by President Obama on May 22, 2009. As described by the Senate Report, its purpose was “to implement needed reforms and help protect consumers by prohibiting various unfair, misleading and deceptive practices in the credit card market.” 2 Comments generated during the adoption of the relevant regulations and testimony before Congress during hearings on the proposed act highlighted a variety of questionable techniques utilized by credit card issuers to increase profits. As the testimony at those hearings indicated, the cardholders who generate the greatest income for credit card issuers are not those who pay in full each month (“deadbeats”), but rather those who “stumble and slide” 3 – i.e., miss payments and thereby incur default rates of interest and penalty fees. 4 Therefore, many of the techniques targeted by the new statute were those contributing to cardholder default.

Four years have passed since the adoption of the CARD Act. Although still in its early stages, it is appropriate to review the effectiveness of those reforms.

A. Interest Rates

The CARD Act did not place ceilings on credit card interest rates. However, it did address two major cardholder interest rate concerns:

  • The right of issuers to increase the interest rate on future purchases — effective immediately; and
  • The right of issuers to retroactively increase the interest rate on past purchases.

1. Immediate increases in interest rates on future purchases.

To address the first concern, the CARD Act now requires card issuers to provide written notice of any increase in annual percentage rate (APR) not later than forty-five days prior to the effective date of the increase. 5 The Act further provides that this written notice inform cardholders of their right to cancel the card, and that such cancellation cannot be considered a default or result in the imposition of any other penalty. 6 Thus, cardholders are given time to arrange alternative financing, or to alter their use of the card, when notified of unfavorable prospective changes.

Furthermore, the new statute actually requires issuers which have increased APRs on any account after January 1, 2009 to review that decision on a periodic basis. If a card issuer has increased the APR on such an account based on such factors as credit risk and market conditions, the issuer is required to maintain “reasonable methodologies” to re-evaluate whether reductions in APR are warranted by changes in those factors at least once every six months. 7

2. Increases in interest rates on past purchases.

The CARD Act also addressed cardholders’ fear that interest rates on existing balances would be increased, particularly as a result of missed payments. 8 The Act adopts as a general proposition the rule that “no creditor may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance…” 9 That general rule is, however, subject to four exceptions. 10 The rate on an existing balance can be increased if 1) the increase is disclosed in advance (e.g., the end of a promotional rate); 2) the increase results from a change in the applicable variable rate; or 3) the increase is the result of a workout arrangement. 11 The fourth exception relates to late payments. Although the interest rate on an existing balance can be increased for missed payments, the issuer can only do so under the new Act if the payment is more than sixty days late. 12 Furthermore, the increase must terminate at the end of six months if the cardholder makes timely payments in the interim. 13 In order to keep the cardholder better informed, the Credit CARD Act further requires the issuer to send a written statement of the reason for such an increase, which must include notice that the increase will terminate after six months of timely payments. 14

3. Effect of CARD Act

In 2011, responsibility for administering the CARD Act was shifted from the Federal Reserve Board to the newly created Consumer Financial Protection Bureau. 15 To help guide it in its responsibilities, the CFPB convened a February 2011 conference on the CARD Act, 16 and conducted a voluntary survey of the nine largest card issuers, together representing 90% of the credit card marketplace. 17 It also conducted a survey of cardholders. The Office of the Comptroller of the Currency further conducted several studies for the conference.

The Fact sheet published by the CFPB as a result of the conference concludes that “The OCC study shows that as a result of the CARD Act, interest hikes on existing accounts have been dramatically curtailed. Prior to the CARD Act, approximately 15% of accounts were repriced over the course of a year; today that number is under 2%.” 18 Further, the CFPB’s industry survey found that “only one of the nine issuers currently has a practice of periodically reviewing the APR on existing accounts and raising interest rates for new purchases,” although acknowledging that issuers do increase rates on new purchases for delinquent cardholders. 19

The CFPB is still in the process of assessing the effect of the new Act. In December of 2012, the CFPB launched an inquiry seeking public comment on the impact of the CARD act on the daily lives of consumers and the behavior of the industry. 20 The requested information includes the success of protections against unfair or deceptive practices, including whether issuers have tried to circumvent any CARD Act protections.

B. Improvident Extensions of Credit

The CARD Act of 2009 also addressed concerns regarding the improvident extension of credit, particularly in regard to aggressive marketing to college students.

1. Ability to pay requirement.

First, the new Act flatly stated that a card issuer may not open a credit card account or increase the credit limit in regard to any consumer “unless the card issuer considers the ability of the consumer to make the required payments under the terms of such account.” 21 The regulations adopted to implement this section require the issuer to establish written policies to consider the cardholder’s income or assets, and current obligations, in making that determination. 22 That determination is to made on the basis of a reasonable estimate of the minimum payment that the cardholder will be required to make. 23

Unfortunately, application of the new standard made it difficult for spouses or partners who did not work outside the home to qualify for credit cards. The CARD Act regulations were therefore amended in May of 2013 24 to remove the requirement that issuers consider only the cardholder’s independent ability to pay in regard to consumers over age twenty-one. Instead, the issuer is permitted to treat the income and assets to which such consumer has a “reasonable expectation of access” 25 as the consumer’s own.

2. Marketing to college students

Secondly, the new Act included detailed provisions designed to protect consumers under the age of twenty-one. No card may be issued to a person under twenty-one unless an adult with the means to repay the debt agrees to co-sign, 26 or the cardholder submits financial information indicating an independent means of repaying the obligation. 27 A similar restriction was imposed upon any increase in credit limits. 28 Detailed provisions also restricted promotional gifts, 29 required colleges to disclose marketing agreements with card issuers, 30 and required colleges to submit annual reports regarding marketing or affinity card agreements. 31 The Act further encouraged colleges to restrict marketing locations and offer credit counseling during orientation programs. 32

3. Effect of CARD ACT

Commentators indicate that the CARD Act has had limited success in protecting young consumers. Early findings indicate that “issuers have continued to solicit college-aged consumers via direct mail and other means,” 33 and that “card companies appear to have a continual presence on and around institutions of higher education.” 34

However, information on college credit card agreements is much more readily available since the adoption of the CARD Act. Three annual reports to Congress on such agreements have been filed, 35 and the CFPB maintains a downloadable database of 798 credit card issuer marketing agreements with universities or affiliated organizations. Further, the CFPB in January of 2013 launched an inquiry on campus financial products in general. 36 Although targeting financial products other than credit cards – such as ID cards doubling as debit cards, cards used to access scholarship and loan funds, and school-affiliated bank accounts – the requested information should serve to inform the regulation of credit cards as well.

C. Exorbitant Fees

Substantial criticism was directed at the exorbitant nature of the fees imposed by card issuers. Congress addressed this concern in two ways. First, it adopted a new general provision which regulated the amount of penalty fees in general. Secondly, it adopted specific provisions addressing particular types of fees.

1. General provision

As to the general provision, Congress for the first time adopted a standard of reasonableness and proportionality against which all credit card penalty fees must be assessed. The CARD Act stated that the amount of any penalty fee or charge that a card issuer could impose for violation of the credit card contract “shall be reasonable and proportional to such omission or violation.” 37 The statute further mandated the establishment of rules for assessing whether that standard was met, including safe harbors for acceptable fees. 38 In issuing those rules, the regulators were directed to consider costs incurred by the issuer, the deterrent effect of such penalty fees, and the conduct of the cardholder. 39

The rules subsequently established by the CFPB provide the issuer with the option to either base its fees upon costs, or rely on safe harbor amounts established by the regulation. 40 If the issuer bases fees on costs, the fee must represent “a reasonable proportion of the total costs incurred by the card issuer as a result of that type of violation.” 41 Card issuers are required to re-evaluate those costs annually. 42 Furthermore, penalty fees may not exceed the dollar amount of the violation (e.g. an over-the-limit fee could not exceed the $5 limit exceeded) and multiple fees may not be assessed for a single violation. 43

In regard to safe harbor penalty fees, the CFPB set a safe harbor fee of $25 for a first violation, and $35 for a repeat violation of the same type, adjusted annually to reflect changes in the Consumer Price Index. 44 In the alternative, the issuer may charge a fee of 3% of the delinquent balance if the card is one which requires payment in full at the end of each billing cycle — provided the cardholder has not paid for two or more billing cycles. 45

2. Specific fee provisions

In addition to the general reasonableness and proportionality requirement for penalty fees, the CARD Act adopted specific provisions which impacted particular fees.

a. Late fees.

“Late fees” are penalty fees charged when a credit card payment is not made on time. Testimony before Congress at the time of adoption of the CARD Act indicated that the “average late fee has jumped from $13 in 1996 to over $30″ in 2007. 46 Such fees had generally been imposed in addition to a default interest rate.

First, the CARD Act specifically referred to late fees in the new provision requiring penalty fees to be reasonable and proportional. 47 In addition, as discussed below, the CARD Act adopted a number of provisions designed to make late payments less likely.

The effect of the CARD Act on late fees appears to have been substantial. The CFPB Factsheet promulgated in 2011 indicated that “The OCC study shows that the CARD ACT has substantially curbed late fees. The total amount of late fees paid by consumers dropped by more than half, from $901 million in January 2010 …. to $427 million in November 2010…” 48

b. Over-the-Limit fees.

“Over-the-limit fees” are penalty fees charged when the card holder exceeds the dollar amount of credit authorized on the card. Testimony at the Congressional hearings indicated that the amount of such an over-the-limit fee could be as high as $49. 49 Furthermore, the over-the-limit fee could be charged month after month if the cardholder was unable to pay enough to reduce the balance below the credit limit.

In addition to requiring that over-the-limit fees be reasonable and proportional, the CARD Act adopted a new provision requiring the express permission of cardholders for such fees to be charged at all. 50 The card issuer is free to extend additional credit without charge, 51 but may not impose a fee for that privilege unless the cardholder has expressly elected to permit the card issuer to complete the transaction (an “opt-in” format). 52 Such election requires the issuer to have provided advance notice of the fee to the cardholder, and any such election is revocable. 53 The CARD Act further prohibits an issuer from manipulating an account to generate penalty fees, 54 and limits the frequency with which over-the-limit fees may be imposed. 55 For example, issuers are prohibited from imposing more than one over-the-limit fee per billing cycle. 56

Early indications are that the CARD Act has had a substantial impact on over-the-limit fees. The CARD Act Factsheet promulgated by the CFPB in 2011 states that “overlimit fees have virtually disappeared in the credit card industry.” 57  The relevant OCC Study showed that “The number of accounts charged an overlimit fee dropped from approximately 12 percent per year to about 1 percent. 58

c. Fee for Chosen Method of Payment

Card issuers sometimes charged a fee for payment by a method other than standard mail. For example, a charge of $15 might be imposed for payment by phone. 59

The Credit CARD Act addressed concerns about charges for method of payment by simply prohibiting them. The Act provides that “the creditor may not impose a separate fee to allow the obligor to repay…by mail, electronic transfer, telephone authorization, or other means…” unless the payment involves an expedited service by a service representative. 60

d. Harvester Fees

The CARD Act included one provision targeting credit cards loaded with up-front fees which would eat up the credit extended – so-called “fee harvester cards.” Critics argued that such cards deceptively reduced the amount of credit available. These cards were generally subprime cards issued to cardholders unable to qualify for traditional cards. The Act provided that if the terms of the card required the payment of fees (excluding late, over-the-limit or NSF fees for payment by bounced checks) “in the first year during which the account is opened in an aggregate amount in excess of 25 percent of the total amount of credit authorized,” those fees could NOT be paid from the credit available on the card. 61

Banks were able to circumvent the new restriction by charging fees on such cards prior to the opening of the account – thus not using up the credit available in the “first year during which the account is opened.” 62 The Federal Reserve Board responded in 2011 by amending the relevant regulation to apply to fees “prior to account opening and during the first year after account opening,” 63 stating that the amendment was necessary in order to maintain the “statutory relationship between the costs and benefits of opening a credit card account.“ 64

In 2011, First Premier Bank brought suit for declaratory judgment to invalidate the amendment. First Premier claimed that the regulatory agencies had exceeded their authority by altering a concrete time-line established by Congress, and by attempting to preclude fees not addressed by the statutory language. 65 The South Dakota federal district court granted a preliminary injunction against enforcement of the amendment in September of 2011. 66

The CFPB subsequently retreated from the battle. By final rule effective March 28, 2013, the CFPB again amended the regulation 67 – this time to make clear that the 25% fee limit applied only “during the first year after account opening.” 68  The CFPB stated that the rule was necessary to resolve the uncertainty created by the South Dakota litigation. Although opponents of the latest amendment may criticize it as a retreat from the battle against exorbitant up-front credit card fees, supporters argue that it increases the availability of cards for cardholders with poor credit histories and is consistent with the Congressional intent manifested by the statutory language.

D. Unfair Procedures

The Credit CARD Act of 2009 further adopted a number of provisions addressing unfair, misleading, or deceptive procedures utilized by card issuers.

1. Incomprehensible Card Agreements

The simple inability of the cardholder to understand his or her legal obligations may lead to default. Testimony at the Congressional hearings was critical of lengthy agreements, buried information, failure to group and label related material, and the use of small typefaces.

Although the CARD Act itself did not directly address the format or language of current credit card contracts, Congress did take steps towards greater transparency. New provisions of the Act require each issuer to maintain an Internet site on which the issuer “shall post the written agreement between the creditor and the consumer for each credit card account…” 69 Further, the relevant regulatory agency was directed to maintain a central repository of those agreements on its Internet site, which “shall be easily accessible and retrievable by the public.” 70 Those credit card agreements are now made available by the CFPB at   The database, which includes archived agreements from 2011 and 2012, permits the download of more than 1500 credit card agreements and is updated quarterly.

The Credit CARD Act did adopt a handful of provisions intended to make the billing statement more cardholder-friendly, mainly directed at enhancing disclosure related to repayment. Statements are required by the statute to include a warning to the cardholder that making minimum payments will increase interest and time to repay. 71 Statements must further include information regarding the time required to pay the entire balance if only minimum payments are made (plus the total cost of doing so), 72 the monthly payment required to eliminate the balance in 36 months, and a toll-free number for information about credit counseling and debt management. 73 All of these disclosures must be conspicuously made in some form of table. 74

Cardholder surveys conducted by the CFPB at the one-year anniversary of the CARD Act indicated that although consumers had a better understanding of the costs of their credit card, they “still do not feel very well informed.” 75 The CFPB therefore continues to pursue efforts to standardize and clarify credit card contracts. 76 The Bureau now maintains on its website a standard set of credit card contract definitions. 77 If a credit card contract adopts those terms, then any word or phrase used in the contract will have the definition set out in those defined terms. Further, the CFPB has drafted a

simplified credit card agreement prototype. 78  The prototype is much shorter than the industry average, is written in plain language, and is organized in three simple sections: costs, changes, and additional information. In December of 2011, the CFPB announced plans to pilot test the prototype with Pentagon Federal Credit Union, and invited public comment.

2. Universal Default Provisions.

The Credit CARD Act of 2009 also addressed the concern that card issuers could use defaults on other obligations to trigger increases in the APR applicable to existing balances. As discussed above, 79 card issuers under the new statute have only limited rights to increase that rate — which do not include cardholder defaults on other obligations. The result is that universal default provisions are no longer effective.

3. Double-Cycle Billing.

A double-cycle (or two-cycle) billing provision establishes a particular method for calculating interest on the credit card balance. Under this method, “when a consumer pays the entire account balance one month, but does not do so the following month, the bank calculates interest for the second month using the account balance for days in the previous billing cycle as well as the current cycle.” 80 Commentators were critical of both the effect and the incomprehensibility of such clauses. Double-cycle billing has been described even by one Federal Reserve Board Governor as “so complex that few consumers can fully understand the implications of this practice, even in the presence of full disclosure.” 81

Congress responded to concerns about the incomprehensibility and unfairness of double-cycle billing by simply prohibiting such a provision. 82 Card issuers issuer should no longer be entitled to reach back to earlier billing cycles when calculating interest for the current cycle.

4. Application of Payments.

To prevent card issuers from applying payments to balances bearing the lowest interest, the CARD Act simply requires that issuers “shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.” 83

5. Deceptive Introductory and Promotional Rates.

The Credit CARD Act of 2009 further addressed concerns that the rates which lured cardholders into choosing a particular card might not be fairly maintained. Subject to certain exceptions, no increase in credit card rates or fees “shall be effective before the end of the 1-year period beginning on the date on which the account is opened.” 84 Furthermore, no increase in APR that is defined by the Federal Reserve Board to be a “promotional rate” “shall be effective before the end of the 6-month period beginning on the date on which the promotional rate takes effect…” 85

6. Techniques Increasing the Likelihood of Late Payment.

Finally, the Credit CARD Act restricted a variety of techniques previously utilized by card issuers to cause late payment. Card issuers may not treat payments as late unless they have adopted “reasonable procedures” to ensure that statements are mailed at least 21 days before payment is due. 86 If the card provides a grace period, then the statement must be mailed at least 21 days before the grace period expires. 87 If a change in the issuer’s handling procedures (such as changing the address for payment) causes a delay in crediting payment, the issuer may not impose a late fee for sixty days after the change. 88

Furthermore, payments are required to be due on the same day each month. 89 If that day is a day on which the issuer does not accept payments (such as a holiday or weekend), payment received on the next business day may not be treated as late. 90 Payment at a branch is payment to a bank. 91

Enhanced disclosure is further required in the billing statement. The statement must disclose in a conspicuous location the date on which payment is due, together with any late fee. 92 If that late payment will result in an increase in APR, notice of the fact and the applicable increase must also be disclosed, and such disclosure must be made in close proximity to the due date. 93

E. Conclusion

Four years of experience under the CARD Act of 2009 indicates that it has achieved mixed success in reaching its stated goals. The Act appears to have had a significant impact on certain techniques which were targeted as unfairly increasing issuer profit. Some of the targeted techniques have been entirely eliminated (e.g. universal default provisions, double cycle billing, fees for method of payment), while others have been significantly curbed (late fees, over-the-limit fees.) The fear, however, is that card issuers may be compensating for those decreased revenues by increasing interest rates or other types of permitted fees. 94

Permitted fees may not have risen dramatically at the initial phase-in of the CARD Act. The authors of an article analyzing statistics supplied by the Federal Reserve’s Report of Terms of Credit Card Plans as of January 2011 concluded that “credit card terms not directly regulated by the CARD Act exhibited little change.” 95 The authors found “little change in the terms for balance transfers,” 96 “no significant change” in returned payment fees” 97 and foreign transaction fees, 98 “no change in default APRs”, 99 and that “annual fees have not substantially increased following the phase-in of the CARD Act rules.” 100 The authors did note that “APRs increased by about one percentage point,” 101 and “cash advance fees have trended upward…” 102  However, when evaluating the impact of the CARD Act at its first anniversary in July of 2011, the most that the CFPB could claim was that “[t]he total amount consumers are paying for their credit cards is no higher, on average, than it was one, two, or three years ago, but the pricing is clearer and more upfront.” 103

A more recent report to Congress on the profitability of credit card operations submitted by the Federal Reserve Board in June of 2013 indicates that profit levels on credit card operations may be returning to pre-recession levels. 104 Although the Report assesses data from only fifteen “credit card banks” (those established primarily to issue and service credit card accounts), those banks account for 60% of outstanding credit card balances. Although acknowledging that the level of earnings in 2012 was lower than the level in 2011, the Report concludes that “The 2012 rate of return is higher than the average rate of return over the 2001-2012 timeframe which is estimated to be 4.24 percent, although not as high as levels reached in several of the years prior to the recent recession.” 105

Although some of the increased profitability may be attributable to improvements in credit quality – many delinquencies and charge-offs have now made their way through the system – some portion appears to be attributable to increased interest rates or fees on other types of issuer services. These may include annual fees; fees for cash advances, balance transfers, or balance inquiries; fees for mailed statements, for copies, or for replacement cards; fees for increases in credit limits; monthly service charges; set-up fees; fees for foreign currency conversion, etc.

Further, in order to increase interest earnings, issuers may be shifting to variable rather than fixed interest rate credit card offerings. As indicated above, one of the exceptions to the prohibition on increasing interest rates on existing balances is a rate tied to a designated outside standard. 106

The Federal Reserve Board’s recent Report to the Congress acknowledges that “pricing practices in the credit card market have changed. Today card issuers offer a broad range of plans with differing rates depending on credit risk and consumer useage. 107 Interest rates thus reflect the features of the plan and the risk profile of the cardholder. Recent commentators have suggested that the disclosure basis of the CARD Act is likely to have little impact on subsistence users who use credit cards to survive, 108 and argue that the Act fails to adequately address behavioral biases that lead to the improvident use of credit cards. 109 Those commentators propose a variety of solutions, including the possible reinstatement of federal usury laws, 110 allowing consumers to set their own credit limits, 111 allowing merchants to impose point of sale surcharges, 112 and banning rewards for carrying balances. 113

Meanwhile, the CFPB continues to launch public inquiry on the impact of the Card Act. 114 In December of 2012, the CFPB sought public comment on such issues as 1) changes in the terms and conditions of credit card contracts and the effectiveness of disclosure; 2) the success of the protections against unfair or deceptive acts or practices, and whether they are being circumvented; and 3) changes in cost and availability of credit. It therefore appears that the role of the CARD Act in protecting consumers and prohibiting unfair practices in the credit card market will continue to evolve.


  1. Pub. L. No. 111-24, 123 Stat. 1734 (2009) (Codified in scattered sections of 5, 11, 15, 20 and 31 U.S.C).
  2. S. Rep. No. 16, 111th Cong., 1st Sess. 2009 (May 4, 2009)(2009 WL 1260169)(Leg. Hist).
  3. One recent commentator has suggested that rather than being an indication of market failure, the credit card problem of excessive debt is in fact a “story of overwhelming market success” in that “credit card companies learned that consumers who are on the verge of bankruptcy represent their greatest source of profits.” Andrea Freeman, Payback: A Structural Analysis of the Credit Card Problem, 55 Ariz. L. Rev. 151, 153 (2013).
  4. See, e.g. Examining the Billing, Marketing and Disclosure Practices of the Credit Card Industry, and Their Impact on Consumers: Hearing on S. 414 Before the S. Comm. on Banking, Housing and Urban Affairs, 111th Cong. (Jan. 25, 2007)(Testimony of Elizabeth Warren, Professor, Harvard Law School) [2007 WL184875 (FDCH)].
  5. 15 U.S.C. §1637(i)(1)(West, Westlaw through August 2013). This general rule is subject to certain exceptions noted therein. For the implementing regulations, see 12 C.F.R. §1026.51 (2013), and the discussion of the final rules in “Truth in Lending,” 75 F.R. 7658-01 (Feb. 22, 2010).
  6. 15 U.S.C. §1637(i)(3-4)(West, Westlaw through August 2013).
  7. 15 U.S.C. §1665c(a-b)(West, Westlaw through August 2013). For the implementing regulations, see 12 C.F.R. §1026.59 (2013), and the discussion of the final rules in “Truth in Lending,” 75 F.R. 37525 (June 29, 2010).
  8. One survey cited by the Senate Report found that “77 percent of credit card issuers reserve the right to increase a consumer’s interest rate on both prospective balances and on consumers’ pre-existing balances under ‘any time, any reason’ clauses.” Supra, note 2 at 5.
  9. 15 U.S.C. §1666i-1(a) (West, Westlaw through August 2013).
  10. 15 U.S.C. §1666i-1(b) (West, Westlaw through August 2013).
  11. Id.
  12. 15 U.S.C. §1666i-1(b)(4) (West, Westlaw through August 2013).
  13. 15 U.S.C. §1666i-1(b)(4)(B) (West, Westlaw through August 2013).
  14. 15 U.S.C. §1666i-1(b)(4)(A) (West, Westlaw through August 2013).
  15. Title X of the Dodd-Frank Act transferred rule-making authority for several financial protection laws from seven other federal agencies to the Bureau of Consumer Financial Protection. Pub. L. 111-203, Title X, §1022, 124 Stat. 1964 (July 21, 2010). see 12 U.S.C. §5491 (West, Westlaw current through August 2013) (creation of the CFPB); 12 U.S.C §5581 (West, Westlaw current through August 2013) (transfer of consumer protection functions); 12 U.S.C. §5512 (West, Westlaw current through August 2013)(rulemaking authority). The CFPB thereafter promulgated a new regulation Z to implement its responsibilities under TILA,, which is set out at 12 C.F.R. Part 1026 (2013). For a discussion of the implementation of the final rule, see 76 FR 79768-01 (Dec. 22, 2011).See also the CFPB website at
  16. For a survey of the key findings, see
  17. The 2011 survey, conducted by Morrison & Foerster, LLP, consisted of an aggregated response by nine banks to thirteen CARD Act Implementation Questions. Participation was voluntary, and the aggregated response was designed to preserve anonymity. The survey is available at
  18. CARD Act Factsheet, available at
  19. Id.
  20. See “Consumer Financial Protection Bureau Launches Public Inquiry on Impact of the Card Act,” (Dec. 19, 2012), available at
  21. 15 U.S.C. §1665e (West, Westlaw through August 2013).
  22. 12 C.F.R. §1026.51(a) (2013).
  23. 12 C.F.R. §1026.51(a)(2)(i)(2013).
  24. 12 C.F.R. §1026.51(a)(1)(ii)( 2013). For a discussion of the adoption of the final rules, see F.R. 25818-01 (May 3, 2013).
  25. Id.
  26. 15 U.S.C. §1637(c)(8)(West, Westlaw through August 2013).
  27. Id.
  28. 15 U.S.C. §1637(p)(West, Westlaw through August 2013).
  29. 15 U.S.C. §1650(f)(2)(West, Westlaw through August 2013).
  30. 15 U.S.C. §1650(f)(1)(West, Westlaw through August 2013).
  31. 15 U.S.C. §1637(r)(2)(A)(West, Westlaw through August 2013).
  32. 15 U.S.C. §1650(f)(3)(West, Westlaw through August 2013).
  33. Eboni Nelson, The CARD Act and Young Consumer Protection: Two Years Later, 31 No. 4 Banking & Fin. Services Policy Report 12 (April 2012). See also Jim Hawkins, The CARD Act on Campus, 69 Wash. & Lee L. Rev. 1471 (Summer 2012)(concluding that students are using student loans to obviate the need to prove ability to repay).
  34. Nelson, supra note 33.
  35. The first two were filed by the Federal Reserve Board. All three are available from the CFPB at
  36. see announcement at
  37. 15 U.S.C. §1665d(a) (West, Westlaw through August 2013).
  38. 15 U.S.C. §1665d(b-e) (West, Westlaw through August 2013).
  39. 15 U.S.C. §1665d(c) (West, Westlaw through August 2013).
  40. 12 C.F.R. §1026.52(b)(1) (2013).
  41. 12 C.F.R. §1026.52(b)(1)(i) (2013).
  42. Id.
  43. 12 C.F.R. §1026.52(b)(2) (2013).
  44. 12 C.F.R. §1026.52(b)(1)(ii)(2013).
  45. 12 C.F.R. §1026.52(b)(1)(ii)(C)( 2013).
  46. Hearing, supra note 4 (statement of Robert Manning) [2007 WL 184876 (FDCH)].
  47. 15 U.S.C. §1665d(a) (West, Westlaw through August 2013).
  48. CARD Act Factsheet, supra note 18. See also Oren Bar-Gill & Ryan Bubb, Credit Card Pricing: The Card Act and Beyond, 97 Cornell L. Rev. 967, 991 and Table 3 (July 2012)(noting “decreasing late payment fees, from in July 2009 down to in January 2011.”)
  49. Hearing, supra note 4 (statement of Elizabeth Warren).
  50. 15 U.S.C. §1637(k)(1) (West, Westlaw through August 2013).
  51. 15 U.S.C. §1637(k)(6) (West, Westlaw through August 2013).
  52. 15 U.S.C. §1637(k)(1) (West, Westlaw through August 2013).
  53. 15 U.S.C. §1637(k)(2) (West, Westlaw through August 2013).
  54. 15 U.S.C. §1637(k)(5)(B) (West, Westlaw through August 2013).
  55. 15 U.S.C. §1637(k)(7) (West, Westlaw through August 2013).
  56. Id.
  57. CARD Act Factsheet, supra note 18. See also Bar-Gill & Bubb, supra note 48 at 986 and Table 3 (noting that “The average over-the-limit fee thereafter sharply drops from in July 2009 down to by January 2011″).
  58. CARD Act Factsheet, supra note 18.
  59. Hearing, supra note 4 (statement of Elizabeth Warren).
  60. 15 U.S.C. §1637(l) (West, Westlaw through August 2013).
  61. 15 U.S.C. §1637(n)(1) (West, Westlaw through August 2013).
  62. For example, First Premier Bank began a new program requiring up-front fees ranging from to that the consumer had to pay before opening the credit card account. see First Premier Bank v. U.S. Consumer Fin. Protection Bureau, 819 F. Supp. 2d 906, 911 (D. S.D. 2011).
  63. 76 FR 22948 (Final Rule, April 25, 2011), amending 12 CFR §226.52(a).
  64. Id.
  65. First Premier Bank, supra note 62 at 914.
  66. First Premier Bank , supra note 62.
  67. 78 FR 18795-01 (March 28, 2013). The amended regulation is currently set out at 12 C.F.R. §1026.52(a)(2013). [Upon assumption of rulemaking authority by the CFPB, the regulation was codified as 12 C.F.R. §1026.52(a).]
  68. 12 CFR §1026.52(a)(1)(2013).
  69. 15 U.S.C. §1632(d)(1) (West, Westlaw through August 2013).
  70. 15 U.S.C. §1632(d)(3) (West, Westlaw through August 2013).
  71. 15 U.S.C. §1637(b)(11)(A) (West, Westlaw through August 2013).
  72. 15 U.S.C. §1637(b)(11)(B) (West, Westlaw through August 2013).
  73. Id.
  74. 15 U.S.C. §1637(b)(11)(D-E) (West, Westlaw through August 2013).
  75. CARD Act Factsheet, supra note 18.
  76. see Marla Blow, “Know Before You Owe: Making Credit Card Agreements Readable, CFPB (Dec. 7, 2011), available at
  77. See .
  78. See announcement (December 7, 2011) at
  79. See discussion supra notes 8-14, and accompanying text.
  80. “Fed Provides Highlights and Comments on Final Rules Regarding Credit Card Accounts,” C.C.H. Federal Banking Law Reporter ¶95-629 (Dec. 18, 2008), 2008 WL 8634656 (C.C.H.) at page 1.
  81. Statement of Randall S. Kroszner, quoted in Federal Banking Law Reports Letter No. 2272, C.C.H. Federal Banking Law Reporter (June 16, 2008), 2008 WL 7050964 (C.C.H.). Use of double-cycle billing was apparently declining even prior to the CARD ACT prohibition. See Bar-Gill & Bubb, supra note 48, at 991.
  82. 15 U.S.C. §1637(j) (West, Westlaw through August 2013).
  83. 15 U.S.C. §1666c(b)(1) (West, Westlaw through August 2013). See also the implementing regulations at 12 C.F.R. §1026.53 (2013).
  84. 15 U.S.C. §1666i-2(a) (West, Westlaw through August 2013).
  85. 15 U.S.C. §1666i-2(b) (West, Westlaw through August 2013).
  86. 15 U.S.C. §1666b(a) (West, Westlaw through August 2013).
  87. 15 U.S.C. §1666b(b) (West, Westlaw through August 2013).
  88. 15 U.S.C. §1666c(c) (West, Westlaw through August 2013).
  89. 15 U.S.C. §1637(o)(1) (West, Westlaw through August 2013).
  90. 15 U.S.C. §1637(o)(2) (West, Westlaw through August 2013).
  91. 15 U.S.C. §1637(b)(12)(C) (West, Westlaw through August 2013).
  92. 15 U.S.C. §1637(b)(12)(A) (West, Westlaw through August 2013).
  93. 15 U.S.C. §1637(b)(12)(B) (West, Westlaw through August 2013).
  94. see Freeman, supra note 3 at 158, 167, 171.
  95. Bar-Gill & Bubb, supra note 48, at 972.
  96. Id. at 997.
  97. Id. at 999.
  98. Id.
  99. Id.
  100. Id. at 993.
  101. Id. at 994.
  102. Id. at 997.
  103. “Building the CFPB – a Progress Report (July 18, 2011), available at (Reports).
  104. “Report to the Congress on the Profitability of Credit Card Operations of Depository Institutions,” Board of Governors of the Federal Reserve System (June 2013), available at
  105. Id.
  106. supra note 11, and accompanying text.
  107. “Report to the Congress,” supra note 104.
  108. Freeman, supra note 3, at 156.
  109. Jonathan Slowik, Comment, Credit Card Act II: Expanding Credit Card Reform by Targeting Behavioral Biases, 59 U.C.L.A. L. Rev. 1292 (June 2012).
  110. Freeman, supra note 3, at 190.
  111. Slowik, supra note 109, at 1330.
  112. Id. at 1325.
  113. Id. at 1339.