Happy 5th Birthday, CARD Act!
by Derek Campfield, 5/21/2014
Millions of credit card holders have benefited both from the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act), and the regulatory and enforcement authority of the Consumer Financial Protection Bureau (CFPB), which administers the law. This important safeguard, which turns 5 today, has protected and benefited consumers in significant ways.
Economists have estimated that consumers have saved $20 billion annually from the reduced fines, fees and interest rate hikes that were routinely forced on consumers before the law’s passage. The CARD Act also protects college students and teens from unfair credit card practices and sets new standards for safeguarding the value of gift cards.
Researchers have found that the predicted costs of complying with the CARD Act were not passed on to consumers through other rate hikes or restricting access to credit, as industry groups claimed would be the case.
The CFPB has a variety of tools for protecting credit card holders, including rulemaking, enforcement authority and consumer complaint submissions. In 2013, the CFPB collected some 16,600 consumer complaints against credit card companies. Importantly, CFPB’s public consumer complaint database is working. Companies are given the chance to respond to every complaint. According to the agency, 68 percent of consumers were satisfied with the response from their credit card company. The CFPB has also brought enforcement actions against major credit card companies for a range of abusive practices. The result: more than $800 million in refunds to millions of Americans.
The CARD Act’s success shows that good, effective regulation not only protects consumers, it also makes markets work better. A strong system of safeguards and standards helps Americans by making sure that our economy and financial marketplace is fair and working for everyone, not just bankers and big corporations, some of which participated in the Wall Street excesses that killed millions of jobs and eroded Americans’ financial security.
This post originally appeared on RegsTalk, the blog of the Coalition for Sensible Safeguards.