Compliance Blog

CFPB's 2019 Credit Card Report

On August 27, 2019, the CFPB released its 2019 report on the consumer credit card market (2019 Report). This report is the fourth such report issued by the CFPB since 2013. As you may recall, the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) authorizes the biennial report, and the CFPB's responsibility for issuing the report arises out of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). As with past reports, the 2019 Report analyzes the use of credit, cost of credit, availability of credit, issuer practices, debt collection issues, and innovation in the marketplace.

The 2019 Report indicates that the level of consumer credit card debt, adjusted for inflation, is at a similar level to that of 2006. See, 2019 Report at 27. While the level of debt fell significantly between 2008 and 2010, the level of consumer credit card debt has steadily risen since 2010 when the economy began to recover from the last recession.

One theme that resonates through the entire report is the effect of technology and mobile applications on the credit card market. Technology continues to shape how credit card issuers market their credit cards:

"Card spending on digital forms of marketing remains small compared to physical mail, but it has been growing significantly. Credit card advertising on social media sites, such as Twitter, Facebook, and Instagram, is becoming more prominent. Issuers increasingly buy digital advertising targeted to specific demographics and pay social media influencers to make and distribute content." See, 2019 Report at 73.

The CFPB notes that credit card issuers have continued to move away from direct mail solicitations, including pre-screens. See, 2019 Report at 73. And mobile applications for credit cards appear to be on the rise:

"Mintel reports that since 2014, mobile's share of all applications has grown by 14 percentage points, while online applications submitted via desktop computer have declined 8 percentage points to account for 28 percent of applications." See, 2019 Report at 76.

The CFPB highlights the high percentage of accounts that have some type of online access:

"As of 2018, 78 percent of active accounts are enrolled in online portals for general purpose cards, significantly higher than the 55 percent the Bureau reported as of 2014. That share is nearly 85 percent for active accounts held by consumers ages 25 to 64 and over 87 percent for active account holders under age 25." See, 2019 Report at 48.

This access has affected how credit card accounts are serviced. While the report notes that credit card account payments through online or mobile channels vary by age group, the data underlying the report supports the conclusion that the usage of digital/online channels to make payments increased for all groups in 2018. See, 2019 Report at 53.

The 2019 Report also looks at rewards programs and consumer use. The data appears to reveal that more and more consumers are using rewards credit cards to make purchases. See, 2019 Report at 99. The 2019 Report finds that the costs of running rewards programs have increased over the past few years and that issuers have adjusted accordingly either by eliminating or reducing benefits that are available to rewards cardholders (e.g., purchase protection, auto rental insurance, etc.) or by charging or increasing annual fees associated with rewards cards. See, 2019 Report at 101-04. Because of the relative absence of federal regulations that apply to credit cards rewards programs, credit card issuers have had to rely on their credit card agreements when changing how their programs work. See. 2019 Report at 103.

Last but not least, the 2019 Report also contains a section that describes some of the scholarly research that discusses the effects of the Credit CARD Act upon the credit card market related to things like pricing, credit card payments, and young consumers.

There’s still time to get the 2019 edition of NAFCU’s Credit Union Compliance GPS. It includes updates on S.2155, Field of Membership Privacy, TCPA and more!

Purchase your copy today

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About the Author

David Park, NCCO, Regulatory Compliance Counsel, NAFCU

David joined NAFCU in September 2018.  As part of the Regulatory Compliance Team, he provides daily compliance assistance to member credit unions on a variety of topics. 
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