CFPB Proposes Simplified Card Agreement
The Consumer Financial Protection Bureau this week proposed a sample simplified credit card agreement template. CFPB's stated goal is to make credit card agreements short, clear, consumer-friendly, and consistent. The proposed template contains references to key terms, defined in a separate list. CFPB seeks public comment on the proposed template, and refers the public to its card agreement database for a comparison of current card agreements. CFPB is testing the proposed template with the Pentagon Federal Credit Union.
The proposed template credit card agreement is part of CFPB’s Know Before You Owe campaign, which has also included proposed reforms related to disclosures for mortgages and student loans.
Court Rejects Citi Settlement with S.E.C.
The U.S. district court for the Southern District of New York last week rejected a $285 million proposed settlement between the Securities & Exchange Commission and Citigroup Global Markets. The case involves a $1 billion mortgage debt deal that Citigroup sold in early 2007. The S.E.C. alleged that Citigroup’s marketing materials materially mislead investors by failing to disclose that Citigroup “exercised significant influence” over the selection of assets and retained short positions in the assets it helped to select.
In the proposed deal, the parties agreed to a consent judgment with no admissions of fact or liability, and included Citigroup’s payment of $285 million dollars to the S.E.C. The payment consisted of the return of the $160 million Citigroup profited from the 2007 deal, $30 million of interest, and a $95 million civil penalty. As part of the settlement, Citigroup also consented to injunctive relief enforced by the Court for the next three (3) years.
Continue Reading...CFPB Releases Its First Consumer Response Report
The Consumer Financial Protection Bureau this week released its first Consumer Response Report, detailing consumer complaints regarding credit cards over the first three months of the CFPB's system for Consumer Response.
The Report makes three observations related to the initial credit card complaint data:
- "Consumer Confusion: Many complaints show consumers struggling to understand the terms of credit cards and associated products like debt protection services. These complaints show a mismatch between consumer expectations and the way the product functions.
- Third-Party Fraud: The complaints show some alleged fraudulent credit card charges made by third parties. The CFPB has helped to obtain redress for defrauded consumers in these instances. In some cases, the Bureau has consulted with the appropriate criminal authorities.
- Factual Disputes: There are a large volume of complaints presenting factual disputes between consumer and issuer. The Bureau has generally found that issuers have been willing to resolve these complaints."
The CFPB also released its Proposed Policy Statement on the Disclosure of Certain Credit Card Complaint Data.
U.S. Supreme Court Admonishes Courts to Enforce Arbitration
In a pointed per curiam opinion, the United States Supreme Court recently reiterated that both state and federal courts must apply the "emphatic federal policy in favor of arbitral dispute resolution." State courts "have a prominent role to play as the enforcers of agreements to arbitrate."
In KPMG LLP v. Cocchi, the Court held that when a party moves to compel arbitration, "state and federal courts must examine with care the complaints seeking to invoke their jurisdiction in order to separate arbitrable from nonarbitrable claims. A court may not issue a blanket refusal to compel arbitration merely on the grounds that some of the claims could be resolved by the court without arbitration." In this respect, the FAA "leaves no place for the exercise of discretion.. ."
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