The CARD Act is spawning new changes as Elizabeth Gooding predicted in a post earlier this year on the topic. Regulation is one of the main drivers of programming work at any company producing customer communications. In addition to the credit card industry, there are changes afoot across lending, brokerage, mutual funds, annuities and retirement.

What process changes and technology investments is your company making in order to respond quickly to ongoing regulatory changes?

Since the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 was signed earlier this year by President Obama, credit card issuers appear to have focused on squeezing every last dime from consumers before the changes take effect. According to research from the Pew Charitable Trust, credit card interest rates have spiked by an average of 20% on 91% of credit cards with outstanding balances.

While the CARD Act strengthened reforms already considered by the Federal Reserve under Regulation Z, and accelerated the time for adoption, some in Washington feel that it did not accelerate the timeline enough. Representatives Carolyn Maloney (D-NY) who authored the credit card reform bill, and Barney Frank (D-MA), Chair of the House Financial Services Committee, have introduced H.R. 3639, the ‘‘Expedited CARD Reform for Consumers Act of 2009.”  The current legislation calls for some provisions to become effective in February 2010 and others in August 2010. This new legislation would  accelerate the effective date for all of the CARD Act reforms to December 1, 2009. 

 “It’s clear that credit card companies are taking advantage of this period between the signing of my bill and the current effective date,” Rep. Maloney said. “The breadth and depth of the rate hikes happening now point to the need for faster consumer protections. Americans need relief now.” You can read the full text of H.R. 3639 here.

Some industry experts have asserted that advancing the compliance deadlines would be nearly impossible for credit card companies to comply with, given the sweeping changes in systems and products referenced in my previous post Countdown to the CARD Act – Part 2. Others argue that if companies can manage the necessary system changes and mailings to facilitate rate hikes to over 90% of the “card carrying public” in a few months, they can facilitate the changes necessary to change rates less frequently as would be mandated by the CARD Act. 

What do you think?

One of the cornerstones of the CARD Act of 2009 is that all the forms and statements that credit card companies send out “have to have plain language that is in plain sight.” The law makes specific requirements for each type of document in terms of content, language and in some cases even type size. The requirements were based, in large part, on extensive consumer research sponsored by the Federal Reserve. An overview of the research and results can be found at http://tinyurl.com/l6o6fr

For card issuers already struggling with portions of the Act that go into effect this week (see Countdown to the CARD Act Part One) the clock is ticking to get all of these changes designed, coded and tested in advance of the February 2010 deadline. I’ve summarize the key content and formatting changes to each type of document below.
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The clock started ticking on May 22, 2009 when the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act was signed by President Obama. It is a landmark piece of legislation that provides American consumers with stronger protection against unfair credit practices than previously imposed by the Federal Reserve under changes to Reg Z and Reg AA. It also gave issuers less time to comply than the Fed: the first date for compliance is this month, only 90 days after the law was passed. Tick. Tick. Tick.

On August 20, 2009 the first provisions of the CARD Act go into effect. By this date, card issuers must have made the changes necessary to ensure that:

• - Cardholders have a minimum of 21 days to pay their bill;
• - Cardholders receive 45 days’ advance notice of significant changes to their card agreements;
• - Notice is provided that cardholders have a right to opt out of significant changes in their account terms, including interest rate and fee increases, as long as they are not more than 60 days overdue on their payments.

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