One of the first things the federal agency in charge of increasing consumers' protection from troubling lending prioritized was developing a form that made it easier for borrowers to understand their credit card agreements, and that goal hasn't changed.
The federal Consumer Financial Protection Bureau has rolled out a number of significant rules for the lending industry, as well as some for businesses associated with it, but one of its top officials recently said that the ability for Americans to better understand their credit card agreements remains one of its foremost priorities, according to a report from Dow Jones Newswires. Currently, it has plans to test a prototype version of its standardized card disclosure form with the Pentagon Federal Credit Union for a few months to get feedback from the institution about how well the document works for both lender and borrower.
"My view continues to be that the consumer ought to be able to read the contract and we can ... create a document that is [binding]," said Marla Blow, assistant director of card markets for the CFPB, during a recent presentation, according to the news agency. "I'd love to get to a first-order outcome, which is a better, more legible, more understandable document that is actually in terms a consumer can understand and still offer legal protections, and addresses the concerns of the issuer."
However, some credit card lenders say that this type of form, or at least the early versions of it, may be problematic for them in the future, the report said. They argue that among the problems this form presents is that it does not lay out certain legal responsibilities between lender and borrower, which could lead to lawsuits from those who run into billing disputes - the largest source of consumer complaints about their credit cards - and therefore increases lender costs unduly.
The CFPB has been in power since last July but only ramped up its operations more considerably in the new year, when it officially received its top executive, former Ohio attorney general Richard Cordray. Since Cordray took office, the agency has increased protections for many types of consumer credit. However, clearer agreements for credit cards, mortgages and other types of credit have been one of the agency's top priorities all along.
