Office of Thrift Supervision, Treasury (OTS).
Final rule.
OTS is amending its regulations at 12 CFR part 535 titled “Prohibited Consumer Credit Practices” to avoid duplication and inconsistency with the Credit Card Accountability Responsibility and Disclosure Act of 2009 and the rules of the Board of Governors of the Federal Reserve implementing that statute.
This rule is effective on July 1, 2010.
Richard Bennett, Senior Compliance Counsel, Regulations and Legislation Division, (202) 906–7409; or April Breslaw, Director, Consumer Regulations, (202) 906–6989, at Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.
On December 18, 2008, OTS used its authority under the Federal Trade Commission Act (15 U.S.C. 41–58) and the Home Owners' Loan Act (12 U.S.C. 1461
The January 2009 UDAP rule contained three subparts to part 535 and an Appendix to part 535 containing an Official Staff Commentary. Subparts A and B addressed general provisions and credit practices respectively. Subpart C addressed unfair consumer credit card account practices. The Supplementary Information to the January 2009 UDAP rule described all these changes in detail.
On May 5, 2009, OTS published proposed amendments to the January 2009 UDAP rule (May 2009 proposed amendments).
On May 22, 2009, the President signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). Public Law 111–24, 123 Stat. 1734 (2009). The Credit CARD Act primarily amended the Truth in Lending Act (15 U.S.C. 1601
The Credit CARD Act and the Board's implementing rule do not affect the provisions of subparts A and B and the corresponding portion of the Appendix in the January 2009 UDAP rule. Accordingly, today's final rule repromulgates those provisions, subject only to necessary conforming amendments. These provisions will take effect on July 1, 2010 as previously scheduled.
In contrast, the practices addressed in subpart C and the corresponding portion of the Appendix in the January 2009 UDAP rule, as proposed to be revised by the May 2009 proposed amendments are subsumed within, though not identical to, the practices addressed by Credit CARD Act and the Board's implementing rule. In some respects, the Credit CARD Act and the Board's implementing rule address the same practices addressed in the January 2009 UDAP rule, but in somewhat different ways that afford greater consumer protection. In order to avoid duplication and inconsistency, OTS is removing subpart C and the corresponding portion of the Appendix. For procedural reasons, OTS is making these changes effective July 1, 2010. Consequently, subpart C and the corresponding portion of the Appendix will not take effect. Likewise, OTS does not intend to finalize the May 2009 proposed amendments.
The Credit CARD Act and the Board's implementing rule do not affect the standards for unfairness or deception under the FTC Act. Accordingly, in analyzing whether an act or practice is unfair, OTS will continue to apply the standards described in the Supplementary Information to the January 2009 UDAP rule.
Further, as noted in the Supplementary Information to the January 2009 UDAP rule, the fact that a particular act or practice is not addressed in a rule on unfair or deceptive acts or practices, does not limit the ability of an agency to make a determination that the practice is unfair or deceptive. 74 FR at 5504. Accordingly, OTS will continue to consider the analysis of consumer credit card account practices contained in the Supplementary Information to the January 2009 UDAP rule and the May 2009 proposed amendments, even though OTS is removing subpart C and the corresponding portion of the Appendix.
OTS issued its January 2009 UDAP rule and the May 2009 proposed amendments jointly with rules issued by the Board and the NCUA. Today's final rule, however, applies only to the OTS rule and does not affect the rules issued by the Board and NCUA. OTS notes that on February 22, 2010, the Board issued a corresponding final rule (75 FR 7925) and on February 10, 2010, the NCUA issued a corresponding final rule (75 FR 6558).
Under 5 U.S.C. 553(b)(B) of the Administrative Procedure Act (APA), an agency may, for good cause, find (and incorporate the finding and brief statement of reasons therefore in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. The conforming amendments to subparts A and B and the corresponding portion of the Appendix are technical in nature. The substance of subparts A and B was previously subject to notice and comment, as described in detail in the
The consumer protections contained in subpart C to part 535 as proposed to be revised by the May 2009 proposed amendments are subsumed within, though not identical to, the protections of the Credit CARD Act and the Board's implementing rule. Accordingly, the removal of subpart C is necessary to avoid duplication and inconsistency. Therefore, OTS has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary.
Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub. L. 96–354, 5 U.S.C. 601), the OTS Director certifies that these amendments to 12 CFR part 535 will not have a significant economic impact on a substantial number of small entities. OTS previously certified that the January 2009 UDAP rule would not have a significant economic impact on a substantial number of small entities.
Office of Management and Budget (OMB) regulations require OMB to review and approve information collection requirements imposed by agency rule. OTS is submitting notification to OMB of revisions to an approved paperwork section. In this final rule, OTS has removed the paperwork requirements for subpart C, which were contained in section 535.24(a).
OTS previously provided a regulatory impact analysis under Executive Order 12866. 74 FR at 5551–5558. The analysis addressed the impact of the consumer credit card practices in subpart C to part 535. Since this final rule removes subpart C, its impact will be eliminated.
OTS has determined that the requirements of this final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Reform Act of 1995. OTS previously certified that the January 2009 UDAP rule would not result in expenditures by State, local, and tribal governments, of $100 million or more in any one year, but may result in expenditures by the private sector in excess of that threshold.
OTS previously certified that the January 2009 UDAP rule does not have any federalism implications for purposes of Executive Order 13132. See 74 FR at 5558. That determination continues to apply.
Consumer credit, Consumer protection, Credit, Credit cards, Deception, Intergovernmental relations, Savings associations, Trade practices, Unfairness.
12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 57a.
(a)
(b)
(c)
For purposes of this subpart, the following definitions apply:
(a)
(b)
(c)
(d)
(e)
It is an unfair act or practice for you, directly or indirectly, to enter into a consumer credit obligation that constitutes or contains, or to enforce in a consumer credit obligation you purchased, any of the following provisions:
(a)
(b)
(c)
(1) The assignment by its terms is revocable at the will of the debtor;
(2) The assignment is a payroll deduction plan or preauthorized payment plan, commencing at the time of the transaction, in which the consumer authorizes a series of wage deductions as a method of making each payment; or
(3) The assignment applies only to wages or other earnings already earned at the time of the assignment.
(d)
(1) Means clothing, furniture, appliances, linens, china, crockery, kitchenware, and personal effects of the consumer and the consumer's dependents.
(2) Does not include:
(i) Works of art;
(ii) Electronic entertainment equipment (except one television and one radio);
(iii) Antiques (any item over one hundred years of age, including such items that have been repaired or renovated without changing their original form or character); or
(iv) Jewelry (other than wedding rings).
(a)
(b)
(c)
You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.
The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.
(2)
(3)
(i) Your name and address;
(ii) An identification of the debt to be cosigned (
(iii) The date (of the transaction); and
(iv) The statement, “This notice is not the contract that makes you liable for the debt.”
(d)
(2)
(3) A person who meets the definition in this paragraph is a
(a)
(b)
1.
2.
By the Office of Thrift Supervision.