NCUA working with agencies on Credit CARD Act, UDAP

ALEXANDRIA, Va. (7/2/09)—The National Credit Union Administration (NCUA) said Wednesday it has begun to work with the Federal Reserve to implement the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, portions of which supersede interagency rules addressing unfair and deceptive acts and practices (UDAP).

Portions of the CARD Act will become effective on Aug. 20 of this year, with the remainder of the bill becoming effective on Feb. 22, 2010. UDAP rules that address credit cards currently have an effective date of July 1, 2010.

The CARD Act limits many of the same credit card practices that the NCUA, the Fed, and the Office of Thrift Supervision targeted via UDAP, including card issuers' ability to increase interest rates and the fees that lenders charge for use of subprime credit cards.

The NCUA said it also believes that the Fed will soon "begin issuing implementing regulations" for Regulation Z. The agency said it is "considering whether there is a need" for separate NCUA rules once Regulation Z becomes effective.

While credit unions should not be overly concerned about dealing with dueling regulatory structures, they should recognize that the UDAP rules, the CARD Act, and Regulation Z all contain similar requirements and restrictions regarding credit card practices.

According to the Credit Union National Association (CUNA), the problematic issue for credit unions in the new credit card law is the new requirement to send periodic statements at least 21 days before payment is due. This 21-day requirement has been particularly problematic because, as the law is written, it would apply to all open-ended credit, not just credit cards.

CUNA is working on this issue, discussing these operational problems with the Fed and raising credit union concerns with key staff on Capitol Hill. CUNA also plans to meet early next week with credit union lending experts to gather additional feedback on the operational compliance problems with applying the 21-day requirement to all open-end loans, and these additional concerns will be conveyed to the Fed.

For CUNA's analysis of the new credit card law, use the resource link.

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Resource Links
CUNA Memo: New Credit Card Law
Credit Cards: Switch and Save statement stuffer


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