CFPB Publishes Sample Credit Card Agreement for Dodd-Frank Act Compliance

The Consumer Financial Protection Bureau (CFPB), the watchdog agency newly created by the Dodd-Frank Act, has issued a proposed new credit card agreement form that strips out much of the legalese used in current credit card agreements. At this point, the new form is not mandatory nor is it a model form, merely a suggested prototype.

The CFPB is currently testing the prototype with the more than one million member customers (including 350,000 cardholders) of the Pentagon Federal Credit Union, and plans to work with other card issuers who are interested in making simplified credit card agreements more prevalent in the industry.

The new credit card agreement form, published on the CFPB's official website, is designed to help consumers who might not understand legalese to better understand what they are agreeing to when signing up for a new credit card. The prototype form contains several key changes from current boilerplate credit card agreement forms:

Begins by explaining the various charges and interest rates in clear termsSeparates legalese into a standardized definitions section based on current industry standardsUtilizes "FAQ"-style sections and tables and provide for easier readability and visual aids

The CFPB's anticipates that these agreements would be posted on a credit card issuer's website to allow for interactive reading by users. Users could click on any portion of the agreement to receive additional consumer information about particular sections such as disputes, charges, or interest rates. Users could also click on the separate definitions section if they wished to read the contract definition of any particular term. Of course, the agreement would also be available in printed form for users without internet access.

The CFPB is interested in knowing what you think about this new form. Click here to view it, interact with it, and comment on it directly to the CFPB.

Other Information:

The CFPB is a powerful new watchdog agency created by the Dodd-Frank Act, and tasked with regulating the offering and provision of consumer financial products or services under the Federal consumer financial laws. The CFPB is designed to have the duties and authority to regulate and enforce a variety of financial consumer protection laws, including:

Independent examination and enforcement of financial consumer protection lawsConsolidated enforcement of a variety of consumer protection laws previously enforced by other agenciesCooperation and communication with other financial regulatory agencies to enhance consumer protection and rule enforcement

For more information on the CFPB or other regulatory agencies affected by the Dodd-Frank Act, click here or visit http://doddfranksummary.com/.

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