The United States Consumer Financial Protection Bureau (CFPB) is beginning its inquiry into credit card marketing and lending practices in the new year, cracking down on deceptive advertising, interest rate hikes for balance transfers and fees for late payments or accounts above total balances. The CFPB aims to better protect consumer credit, and ensure clarity in lending. Credit card debt is adding to the fiscal cliff, and these new regulations attempt to protect consumers and educate them about their rights.
A variety of merchant services including non-secured and prepaid credit cards as well as new smartphone-based mobile payment applications could be affected by these new regulations. The agency will look into lending practices in terms of fairness of lending, who qualifies for credit lines and how interest rates are determined. These new regulations could lead to cards charging higher fees to merchants rather than consumers. At the same time, this oversight could lead to better merchant fraud prevention measures in the coming year. Consumers are likely to feel a boost of confidence and more transparency as to lending practices, which bodes well for fair business, opening up areas of growth for the industry to address.Back To Blog