Alert November 13, 2012

CFPB Proposes to Amend Ability-to-Pay Rule

The CFPB recently announced proposed changes to the regulations requiring credit card issuers to evaluate a consumer's ability to make payments based on his or her independent income or assets prior to opening an account. The changes are in response to findings that a significant number of otherwise creditworthy individuals may have been denied access to credit cards because their income is dependent upon their spouse or partner. The proposed changes remove references to “independent” ability to pay and permit accessible income to be included in the evaluation of a consumer’s ability to pay, provided that the consumer has a reasonable expectation of access to the funds. Furthermore, this change would be available to all credit card applicants 21 years of age and older, whether they are married or unmarried. CFPB Director Richard Cordray stated that the proposed rule “strikes the right balance between honoring the letter and purpose of the law without compromising consumer empowerment."