On June 28, 2018, the Consumer Financial Protection Bureau (CFPB) announced entered into a consent order with a national bank, resolving allegations that the bank violated the Truth in Lending Act (TILA) by failing to reevaluate and reduce the annual percentage rates on consumer credit card accounts.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 amended TILA to require that, if a creditor increases the APR on a credit card, the creditor must review the account every six months to assess whether the factors that led to the increase had changed, and to reduce the APR when indicated by the review.
The CFPB alleged that the bank failed to implement those APR reevaluation requirements at all prior to February 2011, and that several of the review methodologies subsequently implemented were insufficient. The bank conducted a compliance review of its credit card line of business in 2016 and reported certain APR deficiencies and errors to the CFPB in early 2017, voluntarily initiated the process of providing restitution to affected consumers, and implemented changes to its compliance management systems.
Pursuant to the order, the bank will implement and maintain reasonable policies for conducting APR reevaluations and pay $335 million in restitution to the 1.75 million affected consumer accounts.