AFSA Submits CFPB RFI Letter on Credit Card Market

AFSA this week responded to a request for information (RFI) from the Consumer Financial Protection Bureau (CFPB) regarding the credit card market. The bureau is seeking information as part of its mandate to “conduct a review…of the consumer credit market every two years.”

AFSA’s letter laid out two key areas for the bureau’s consideration.

The first urged the bureau to act cautiously in the payment systems space, as new technologies continue to move payment systems from physical cards to mobile wallets and connected devices.

“These emerging technologies will have a global, transnational impact and so we believe the CFPB should move cautiously and allow financial institutions maximum flexibility to respond to ever-evolving challenges,” Celia Winslow, Vice President of Legal & Regulatory Affairs wrote in the letter.

The second area called on the bureau to consider regulating the growing debt settlement market. These companies, often referred to as “debt relief” or “debt settlement” companies, “claim they can settle a consumer’s debt with a significant reduction in the amount owed to a creditor or debt collector.”

These companies generally encourage consumers to stop paying creditors and charge exorbitant fees, even though consumers can often work directly with creditors for settlements without fees. The bureau’s website cautions consumers against using debt settlement companies and the letter commends both the CFPB and the Federal Trade Commission (FTC) for their actions in this area.

The letter asks that the bureau takes a closer look at these companies and the harm they are causing consumers and consider writing rules that protect consumers from ending up in deeper debt.