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It is going to be awhile before most credit unions feel like they’ve fully digested each of the new and upcoming regulatory changes. Most people just don’t have the time to read each new rule and all of the accompanying information. The problem is that if you don’t read all of the information you can miss some key points. In other words, you can’t read just the new rules, and feel confident you’ve got it—you’ve really got to read the new rules, the commentary to the new rules, the supplementary information that is published in the Federal Register, etc.
For example, one of the new CARD Act provisions of Regulation Z clearly prohibits card issuers from imposing a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) consumer credit plan when there is no dollar amount associated with the violation. The rules stipulate that there is no dollar amount associated with the following violations:
- Transactions that the card issuer declines to authorize;
- Account inactivity; and
- The closure or termination of an account.
Simple enough, right?—you can’t charge a fee for account inactivity. Well, you’ve got to read the commentary to learn that a card issuer is also prohibited from imposing an annual fee on all accounts but waiving that fee if the consumer spends up to a certain dollar amount. In other words, a credit union may not charge an annual fee for a credit card and then waive the fee for all members that spend, say, $1000 per year. The commentary states:
Inactivity fees. Section 226.52(b)(2)(i)(B)( 2 ) prohibits a card issuer from imposing a fee based on account inactivity (including the consumer’s failure to use the account for a particular number or dollar amount of transactions or a particular type of transaction). For example, §226.52(b)(2)(i)(B)( 2 ) prohibits a card issuer from imposing a $50 fee when a consumer fails to use the account for $2,000 in purchases over the course of a year. Similarly, §226.52(b)(2)(i)(B)( 2 ) prohibits a card issuer from imposing a $50 annual fee on all accounts but waiving the fee if the consumer uses the account for $2,000 in purchases over the course of a year.
This distinction may not be very clear to many people from the rule itself, but the commentary is crystal clear.
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