- CFPB Issues Bulletin Regarding Marketing of Promotional Credit Card Offers
- September 10, 2014 | Authors: Peter L. Cockrell; Brett M. Kitt; J. Scott Sheehan
- Law Firms: Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Washington Office ; Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Houston Office
On September 3rd, the CFPB issued Bulletin 2014-02 warning credit card companies against deceptively marketing interest-rate promotions to consumers. The CFPB is concerned that consumers do not adequately understand certain types of credit card offers, such as balance transfers, deferred-interest offers, and convenience checks. The CFPB previously raised concerns about consumer understanding of such offers in its October 2013 CARD Act Report. Often these promotional offers will allow consumers to transfer a balance for a fee and receive a promotional interest rate for a limited period of time. Although the offers feature a lower interest rate during the promotional period, additional purchases made by the consumers with the credit card may incur interest charges immediately or at the normal rate. In the CFPB's view, some companies' marketing materials do not disclose the terms of these promotional offers to consumers clearly enough. The Bulletin describes what the CFPB considers to be deceptive marketing practices with respect to such promotional offers and suggests how companies can clearly disclose the costs and terms associated with these offers.
According to the Bulletin, the CFPB expects credit card companies to incorporate adequate measures into their compliance management systems to address these potentially deceptive types of marketing. The CFPB recommends the following steps to ensure compliance:
- All solicitations, applications, account-opening materials, and convenience checks comply with the requirements in Regulation Z;
- All marketing materials clearly, prominently, and accurately describe the material costs, conditions, and limitations associated with the offers; and
- All marketing materials clearly, prominently, and accurately describe the effect of promotional APR offers on the grace period for new purchases.