The CFPB issued a bulletin (Bulletin 2014-02) to credit card companies, warning them of the risk of engaging in deceptive and/or abusive acts and practices in connection with solicitations that offer a promotional APR on a particular transaction over a defined period of time. The bulletin targets creditors that offer low or zero APRs without clearly disclosing the possibility of future interest rate increases, which it said may be construed as an illegal attempt to lure consumers in, only to hit them with surprise charges later on. The bureau explained that depending on the facts and circumstances, a credit card issuer may risk engaging in deceptive or abusive conduct if it fails to adequately make this disclosure.
The bulletin offers some more general take-aways. For example, the CFPB focuses on whether marketing materials adequately and prominently convey key information that impacts the consumer’s decision-making process. More importantly, however, the bulletin adds a bit of clarity with respect to the abusive standard, suggesting that taking unreasonable advantage of consumers by exploiting their lack of understanding with respect to additional costs rises to the level of an abusive act or practice.
More information may be found here.