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Truth in Lending: 1.2.3 1988 Consumer Protection Amendments

The next two major amendments to TILA were driven by changes in consumer credit products and marketing practices. In 1988, the Act was amended to add the Fair Credit and Charge Card Disclosure Act.54 Competition for the extremely profitable credit card business had become more intense, and issuers bombarded consumers with solicitations. (One estimate was that U.S.

Truth in Lending: 1.2.6 The 2005 Bankruptcy Amendments Affecting TILA

On April 20, 2005, the President signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.81 A small portion of this Act amended TILA.82 These amendments create additional disclosure requirements for credit card issuers regarding the effect of paying the minimum payment, teaser or introductory annual percentage rates, late payment deadlines, and internet-based credit card solicitations.

Truth in Lending: 1.5.2.2 The Pre-Simplification Version of TILA

The pre-Simplification Act generally applies to loans made prior to 1982. There are few if any consumer loans still outstanding from the pre-Simplification era, so that law is unlikely to be relevant. However, for some now very old loans, recoupment claims may remain available in the context of bankruptcy or defending against collection.209 These claims may be especially relevant in defending foreclosures of older mortgages. The pre-Simplification law and the regulation implementing it are no longer contained in this treatise.

Truth in Lending: 1.5.3.3.5 The CFPB’s 2019 Sandbox and No Action Letter Policies

In September 2019, the CFPB published final versions of two new policies that purported to shield regulated entities from certain enforcement actions and liabilities. Both policies were applicable to TILA compliance. The two policies were the Compliance Assistance Sandbox Policy (Sandbox Policy)275 and the No Action Letter Policy (NAL Policy).276 Consumer groups and state officials voiced strong opposition to both measures when they were proposed.

Truth in Lending: 1.5.3.4.6 Rulemaking for mortgage loans under the Dodd-Frank Act

In January and February 2013, the CFPB issued a number of major rules, regarding ability to repay, mortgage servicing, HOEPA, appraisal requirements for higher-priced mortgage loans, mortgage loan originator compensation, arbitration, credit insurance, and escrow requirements. The Dodd-Frank requirements for periodic statements, payoff statements, and adjustable rate reset notices were also implemented.

Consumer Banking and Payments Law: 19(d) Agreements for All Open Accounts

1. Requirement applies to all open accounts. The requirement to provide access to prepaid account agreements under § 1005.19(d) applies to all open prepaid accounts. For example, an issuer that is not required to post agreements on its Web site because it qualifies for the de minimis exception under § 1005.19(b)(4) would still be required to provide consumers with access to their specific agreements under § 1005.19(d).

Consumer Banking and Payments Law: 1005.20(a)-1 to -5

1. Form of card, code, or device. Section 1005.20 applies to any card, code, or other device that meets one of the definitions in §§ 1005.20(a)(1) through (a)(3) (and is not otherwise excluded by § 1005.20(b)), even if it is not issued in card form. Section 1005.20 applies, for example, to an account number or bar code that can be used to access underlying funds.

Consumer Banking and Payments Law: 20(a)(2) Store Gift Card

1. Relationship between “gift certificate” and “store gift card.” The term “store gift card” in § 1005.20(a)(2) includes “gift certificate” as defined in § 1005.20(a)(1). For example, a numeric or alphanumeric code representing a specified dollar amount or value that is electronically sent to a consumer as a gift which can be redeemed or exchanged by the recipient to obtain goods or services may be both a “gift certificate” and a “store gift card” if the specified amount or value cannot be increased.

Consumer Banking and Payments Law: 20(a)(3) General-Use Prepaid Card

1. Redeemable upon presentation at multiple, unaffiliated merchants. A card, code, or other device is redeemable upon presentation at multiple, unaffiliated merchants if, for example, such merchants agree to honor the card, code, or device if it bears the mark, logo, or brand of a payment network, pursuant to the rules of the payment network.

Consumer Banking and Payments Law: 20(a)(4) Loyalty, Award, or Promotional Gift Card

1. Examples of loyalty, award, or promotional programs. Examples of loyalty, award, or promotional programs under § 1005.20(a)(4) include, but are not limited to:

i. Consumer retention programs operated or administered by a merchant or other person that provide to consumers cards or coupons redeemable for or towards goods or services or other monetary value as a reward for purchases made or for visits to the participating merchant.

Consumer Banking and Payments Law: 20(a)(7) Activity

1. Activity. Under § 1005.20(a)(7), any action that results in an increase or decrease of the funds underlying a gift certificate, store gift card, or general-use prepaid card, other than the imposition of a fee, or an adjustment due to an error or a reversal of a prior transaction, constitutes activity for purposes of § 1005.20. For example, the purchase and activation of a certificate or card, the use of the certificate or card to purchase a good or service, or the reloading of funds onto a store gift card or general-use prepaid card constitutes activity.

Consumer Banking and Payments Law: 20(b) Exclusions

1. Application of exclusion. A card, code, or other device is excluded from the definition of “gift certificate,” “store gift card,” or “general-use prepaid card” if it meets any of the exclusions in § 1005.20(b). An excluded card, code, or other device generally is not subject to any of the requirements of this section. See, however, § 1005.20(a)(4)(iii), requiring certain disclosures for loyalty, award, or promotional gift cards.

Consumer Banking and Payments Law: 20(c)(1) Clear and Conspicuous

1. Clear and conspicuous standard. All disclosures required by this section must be clear and conspicuous. Disclosures are clear and conspicuous for purposes of this section if they are readily understandable and, in the case of written and electronic disclosures, the location and type size are readily noticeable to consumers. Disclosures need not be located on the front of the certificate or card, except where otherwise required, to be considered clear and conspicuous.

Consumer Banking and Payments Law: 20(c)(2) Format

1. Electronic disclosures. Disclosures provided electronically pursuant to this section are not subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). Electronic disclosures must be in a retainable form. For example, a person may satisfy the requirement if it provides an online disclosure in a format that is capable of being printed.

Consumer Banking and Payments Law: 20(c)(4) Disclosures on the Certificate or Card

1. Non-physical certificates and cards. If no physical certificate or card is issued, the disclosures required by this paragraph must be disclosed on the code, confirmation, or other written or electronic document provided to the consumer. For example, where a gift certificate or card is a code or confirmation that is provided to a consumer online or sent to a consumer’s email address, the required disclosures may be provided electronically on the same document as the code or confirmation.

Consumer Banking and Payments Law: 20(d) Prohibition on Imposition of Fees or Charges

1. One-year period. Section 1005.20(d) provides that a person may impose a dormancy, inactivity, or service fee only if there has been no activity with respect to a certificate or card for one year. The following examples illustrate this rule:

i. A certificate or card is purchased on January 15 of year one. If there has been no activity on the certificate or card since the certificate or card was purchased, a dormancy, inactivity, or service fee may be imposed on the certificate or card on January 15 of year two.

Consumer Banking and Payments Law: 20(e) Prohibition on Sale of Gift Certificates or Cards With Expiration Dates

1. Reasonable opportunity. Under § 1005.20(e)(1), no person may sell or issue a gift certificate, store gift card, or general-use prepaid card with an expiration date, unless there are policies and procedures in place to provide consumers with a reasonable opportunity to purchase a certificate or card with at least five years remaining until the certificate or card expiration date. Consumers are deemed to have a reasonable opportunity to purchase a certificate or card with at least five years remaining until the certificate or card expiration date if:

Consumer Banking and Payments Law: 20(g) Compliance Dates

1. Period of eligibility for loyalty, award, or promotional programs. For purposes of § 1005.20(g)(2), the period of eligibility is the time period during which a consumer must engage in a certain action or actions to meet the terms of eligibility for a loyalty, award, or promotional program and obtain the card, code, or other device.

Consumer Banking and Payments Law: 20(h)(1) Delayed Effective Date

1. Application to certificates or cards produced prior to April 1, 2010. Certificates or cards produced prior to April 1, 2010 may be sold to a consumer on or after August 22, 2010 without satisfying the requirements of §§ 1005.20(c)(3), (d)(2), (e)(1), (e)(3), and (f) through January 30, 2011, provided that issuers of such certificates or cards comply with the additional substantive and disclosure requirements of §§ 1005.20(h)(1)(i) through (iv).

Consumer Banking and Payments Law: 20(h)(2) Additional Disclosures

1. Disclosures through third parties. Issuers may make the disclosures required by § 1005.20(h)(2) through a third party, such as a retailer or merchant. For example, an issuer may have a merchant install in-store signage with the disclosures required by § 1005.20(h)(2) on the issuer’s behalf.

2. General advertising disclosures. Section 1005.20(h)(2) does not impose an obligation on the issuer to advertise gift certificates, store gift cards, or general-use prepaid cards.