CFPB targets ‘deleted data’ from credit cards
The Consumer Financial Protection Bureau (CFPB) announced on Wednesday, May 25 in a blog post that it has sent letters to the largest credit card companies in the country asking them why they do not regularly provide data to credit bureaus about the actual monthly payments their borrowers make.
According to CFPB research, only about half of the largest credit card companies provide data to credit reporting companies on the exact amounts of monthly payments made by borrowers. The same research also showed that over a short period of time, several of the larger credit card companies began to remove the actual payment amount information they had previously provided or provided about consumers.
For the agency, this practice of deleting payment data can be detrimental because it can impact consumers’ ability to access credit at the most competitive rates. The CFPB explains how consumers rely on this data to receive credit at competitive prices based on their ability to manage and repay their credit obligations. By removing payment amount data, the ability of lenders to take out credit competitively can also be hampered.
In a letter to the CEOs of JP Morgan Chase, Citibank, Bank of America, Capital One, Discover and American Express, – note that credit card networks like Visa and Mastercard may not be among the recipients of these letters – the CFPB asks them about these practices and the reasons for changing their policies.
The agency asks five questions to find out why the company has been able to provide payment data since 2012 and no longer does – or, if it has never provided data on a regular or consistent basis since 2012, to explain the ” rationale” for this practice.
The last question is more forward-looking and might provide insight into why the agency is asking these questions. The CFPB wants to know if these companies plan to start providing information on the actual amount of payments, and how quickly and accurately they could provide it.
“Today, the practice of withholding consumer credit card payment information is even further out of step with market and regulatory trends,” the agency said in the blog post.
The CFPB gave companies 30 days to respond in writing. These letters are neither a formal inquiry nor a request for supervision – so answering these questions is not mandatory. However, the information provided, while confidential, will be used to support the agency’s ongoing market and policy planning. The Bureau does not provide further information on what “policy planning” means in this context, but CFPB Director Rohit Chopra has made it clear in several public statements that credit card fees and other Credit card issues are a priority for the agency.
Read more: CFPB’s Chopra Hints at Credit Card Rule Changes During Congressional Hearing
One of Chopra’s last public testimony about credit card charges came before Congress in April, where he provided information about the “junk charge” investigation. In addition, the CFPB director said credit card charges were a priority for the agency and he ordered his staff to review whether the agency could reopen the CARD Act rules to see if any changes were needed. “Certainly, late fees is an area I expect we’ll be seeking comment on, as it’s important for this market to be competitive,” Chopra said.