Compliance Center: CFPB Issues Bulletin Regarding Marketing of Credit Card Promotional APR Offers

The Consumer Financial Protection Bureau (CFPB) recently released CFPB Bulletin 2014-2 regarding the marketing of credit card promotional annual percentage rate (APR) offers. The CFPB stated it has concerns that some companies are luring consumers with offers of zero or lower interest rates for a specific purchase of balances transferred from another credit card, and then hitting the consumer with surprise interest charges. The Bulletin is intended to put credit card issuers on notice about clearly disclosing the costs and risks of these promotional offers or potentially risk being seen as having a deceptive practice.

The Bulletin discusses the CFPB’s concerns of deceptive advertising practices that might not include any information about the loss of the grace period for new purchases not tied to the promotional offer, and even potential abusive practices.

Regulation Z does not require marketing materials to include additional disclosures alerting members to the effect of accepting a promotional offer on the loss of the grace period on purchases. But, the CFPB is concerned that the marketing materials accompanying some offers may risk being deceptive or abusive in violation of the Dodd-Frank Act, even if Regulation Z is not violated.

The CFPB expects card issuers to take steps to ensure that:

  • 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.

Compliance Question of the Week

Does federal law require a credit union to provide an overdraft notice whenever an NSF item is presented?           

No. Truth in Savings does not require that a credit union give a member an overdraft notice when an NSF item occurs. However, credit unions are now required to include notice on the member’s statement advising of any overdraft fees or returned item fees.  Credit unions do generally send a notice as a matter of industry practice and member courtesy. This notice is also helpful as a loss control measure since it raises a red flag for errors or unauthorized items.

And while there is not a regulatory requirement to send the notice, the Joint Guidance on Overdraft Protection Programs suggests a best practice to promptly notify the member each time the overdraft protection item is used.

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Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, Federal, Marketing & Communications.