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Fed addresses CARD Act compliance problem
WASHINGTON (7/16/09)—The Federal Reserve Board Wednesday issued an interim final rule under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act and included supplementary information that addresses a problem regarding sending out statements 21 days before a payment is due. Under the CARD Act, this provision applies to all open-end credit, not just credit cards, and is effective Aug. 20. The Credit Union National Association (CUNA) has been working with the Fed to convey credit union concerns about the fast-approaching compliance date for the provision that would reach way beyond credit cards and also cover such things as: general lines of credit, lines of credit associated with share draft and checking accounts, signature loans, and home equity lines of credit and--of particular concern to credit unions--to multi-featured, open-end lending programs. CUNA has urged an extended compliance timeframe. The interim final rule itself does not change the requirements in the law. However, in the supplementary information that accompanied the rule, the Fed acknowledged the difficulty in compliance. The Fed indicated that "for a short period of time after August 20," periodic statements for open-end credit other than credit cards may disclose due dates that are inconsistent with the 21-day requirement under certain circumstances. There must, for instance, be prominent disclosure elsewhere, either on the statement or in an insert, that the payment will not be treated as late if received within 21 days after the statement was mailed. CUNA staff remains in contact with Fed attorneys to further clarify the meaning of "a short period of time." “Our goal is to obtain at least an oral assurance from the Fed's staff that ‘a short period of time’ will allow a credit union to do nothing more than to provide this alternative disclosure to accountholders until the effective date of the final version of this rule,” said CUNA Senior Assistant General Counsel Jeffrey Bloch late Wednesday. Feb. 22, 2010 is the effective date for other sections of the CARD Act. This interim rule will be out for comment for 60 days. During that time CUNA will work to ensure that a final rule provides additional flexibility, both with regard to limiting the scope of the provisions to credit cards or, in the alternative, providing credit unions and others with the time necessary to comply, Bloch said. CUNA will be hosting an audio call soon, which will provide additional information about the interim final rule, including the latest on the "21-day" issue. Watch CUNA’s News Now for details.


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