WASHINGTON (5/2/08) — The National Credit Union Administration (NCUA) Thursday approved a joint proposed rule to ban unfair and deceptive credit card and overdraft practices under the Federal Trade Commission Act. Once the proposal is published in the Federal Register
, it will be open for public comment for 75 days. The Office of Thrift Supervision approved a substantively identical plan for thrifts and the Federal Reserve Board was expected to follow with a similar action for banks within a day. The proposal is similar to recent bills introduced in Congress and intended to address certain credit card practices. The Credit Union National Association’s regulatory advocacy staff is reviewing the regulatory proposal in detail, but it appears upon initial review that not all of the provisions would impact credit unions, according to Jeffrey Bloch, senior assistant general counsel. Bloch also noted that Congress has urged opt-in provisions for overdraft programs and the regulatory proposal does not go that far. It instead proposes to give accountholders and opportunity to opt out of such programs. The joint plan is intended to address practices that have raised concern about fairness and transparency. For credit cards, the proposal would address the following seven areas:
* Unfair time periods for making payments; * Unfair payment allocations; * Unfair interest rate increases on outstanding balances; * Unfair fees from credit holds; * Unfair methods of computing balances; * Unfair security deposits and fees charged to an account for the issuance of credit; and * Deceptive offers of credit.
For overdraft protection services on deposit accounts, the proposed rule would address:
* A consumer’s ability to opt out of overdraft services; and * Unfair fees for debit holds.
As each agency approves the plan, they will post the proposal to their respective websites. The NCUA indicated the plan will be available this afternoon at approximately 2:30 p.m. on NCUA’s website. Although the Federal Trade Commission has authority in this area over state-chartered credit unions and will not be issuing a proposal at this time, it is anticipated that state-chartered credit unions will likely be expected to follow the new rule. CUNA’s Consumer Protection Subcommittee will review the joint proposal closely to assess whether the means of allowing the overdraft program opt-out do not impose unnecessary burdens on credit unions. Also, the subcommittee will review the proposed banned credit card practices to determine if there will be unanticipated consequences for credit unions and their members.