Risky business – CFPB credit card promo warning

by. Jennifer Anderson

This week the CFPB is warning against the deceptive marketing of interest-rate promotions to consumers. The Bureau is concerned that consumers are being lured to apply for and open a card/account with introductory or promotional rate that are reduced or zero interest for specific purchases or balance transfers, and then consumers are being hit with surprise interest rates.

Credit card promotional offers are always a hot topic when I present on marketing compliance.  Credit unions like to promote the amazing introductory or promotional APR or free they are offering, but many credit unions find it hard to balance promoting the introductory or promotional offer and disclosing the post-introductory or post-promotional APR or fee in a prominent location, closely proximate to the introductory or promotional APR or fee.  A credit union may be at risk of being deceptive in their marketing if the solicitation does not follow the proper marketing compliance guidelines.

In addition to disclosing the post-introductory or post-promotional APR or fee a credit union should ensure they clearly and prominently convey that a member who accepts a promotional offer and continues to use the credit card to make purchases will lose the grace period or introductory/promotional rate on new purchases if the member does not pay the entire statement balance, including the amount subject to the promotional APR, by the payment due date.

The CFPB bulletin goes on to specifically discuss sections of the Dodd-Frank Act which prohibits engaging in deceptive acts or practices and the disclosure requirements under Regulation Z.

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