ABA: Card Market Overregulation Would Harm Credit Access

The credit card market is functioning well, and consumers feel their bank is there for them during the COVID-19 pandemic, ABA said in a letter to the CFPB today. The letter came as the CFPB begins its biennial review of the consumer credit card market, as mandated by the CARD Act. The next report is due in 2021.

In the letter, ABA raised concerns that overregulation through rate caps or other new rules could have a significant negative effect on consumers during the pandemic. “Without access to a credit card, these consumers (particularly subprime borrowers) must turn to alternative short-term lending options, such as payday loans, deposit advances, or bank overdrafts,” the association said.

The letter also addressed the need to modernize how consumers receive credit card disclosures, including regulatory requirements related to the E-SIGN Act. In particular, ABA urged the CFPB to “undertake a fresh, comprehensive review of all Regulation Z disclosure requirements with an eye toward the current digital landscape” and “develop alternative standards that can be used for different modes of communications and emerging technologies, especially the conversational and responsive interfaces consumers are seeking.”

While citing a recent Morning Consult poll showing that the public highly rated banks’ handling of COVID-19, ABA shared several of the industrywide measures that are supporting consumers in financial distress. The letter also addressed credit card rewards programs, essential market practices and the risks of overregulation, the banking industry’s response to COVID-19 and credit reporting.