CARD Act RFI Response - Part 2

 

 

 

June 17, 2015

 

By electronic delivery to:

www.regulations.gov

 

Monica Jackson

Office of the Executive Secretary Consumer Financial Protection Bureau 1700 G Street NW

Washington, DC 20552

 

Re:       Request for Information Regarding Credit Card Market Docket No. CFPB-2015-0007

 

Dear Ms. Jackson:

 

The Financial Services Roundtable1 and the Consumer Bankers Association2 (the “Associations”) appreciate the opportunity to provide comments on the Consumer Financial Protection Bureau’s (the “Bureau”) request for information on the credit card market.3 We strongly support the Bureau’s efforts to gather data on the credit card market and to make evidence-based, incremental improvements to the Bureau’s operations and issuances in order to

enhance consumer protection.  (The Associations are providing comments in this letter on online disclosures, grace periods, add-on products, and debt collection in accordance with the Bureau’s partial extension of the Request’s comment deadline.4 We provided comments in a letter dated May 18, 2015 on ability to pay, rewards products, deferred interest promotional offers, and the continuing impact of the CARD Act on the credit card market.5)

 

I.            Background

 

The six years since the CARD Act became law have seen three key trends in the credit card market: enhanced consumer protection, enhanced customer satisfaction, and slow growth. In this environment, additional restrictions on the issuance of credit cards to consumers are not necessary.

 

Enhanced Consumer Protections.  Among the material changes to credit card issuers’ operations implemented since 2009 are new procedures for measuring the ability to pay, new limitations on fees and fee increases, new procedures for reevaluating rate increases, new procedures for allocating payments, opt-in requirements for over-limit charges, and the submission of cardholder agreements for public posting.

 

Enhanced Customer Satisfaction.  Cardholders’ satisfaction with their credit cards is at an all-time high according to the J.D. Power 2014 U.S. Credit Card Satisfaction Study™.6   Our members attribute a significant portion of this higher level of satisfaction to enhanced service offerings, including rewards programs and online account access portals with innovative features, such as mobile fraud alerts.

 

Slow Growth.  Consumer credit card markets have not recovered from the 2008 economic recession as quickly or as strongly as non-revolving consumer credit markets.  Total outstanding non-revolving consumer credit markets made a fairly quick recovery, from a low of $1,520.6 billion in 2007, up to $1,807.4 billion in 2010 and $2,427.6 billion in 2014.7   But total outstanding revolving consumer credit was at $1,008.1 billion in 2008, reached a low of $840

billion in 2010, and rose to only $889.5 billion in 2014.  So while non-revolving consumer credit has overcome its recession lows and grown an additional $907 billion (59.6%), the revolving consumer credit market remains depressed by $118.6 billion (-11.8%) compared to its pre- recession level.  While this slow recovery is due to many factors, one is the CARD Act and its implementing regulations.

 

II.              Overview

 

The Request invites comment generally on the credit card market and on any or all of the specific questions posed by the Bureau.8 This letter addresses the issues for which additional time was granted, including:

 

  • Online Disclosures (Section 2(e)).  We urge the Bureau to provide additional guidance on the delivery of clear and conspicuous online disclosures.

 

  • Grace Periods (Section 2(g)). We identify the robust disclosures and substantive consumer protections currently required for grace periods.

 

  • Add-On Products (Section 2(h)).  We seek additional guidance on compliant sales practices for add-on products.

 

  • Debt Collection (Section 2(k) of the Request).  We refer the Bureau to comments filed in response to the Bureau’s 2013 Advanced Notice of Proposed Rulemaking on Debt Collection, and provide details on our members’ practices to minimize pre-charge-off losses and secure recoveries post-charge-off, as well as the use of third party debt collectors and debt sales. We also encourage the Bureau to consult with the states and other regulators when addressing debt collection.

 

III.             Comments

 

  1. Online Disclosures

 

Innovations in Electronic Account Access. Our members have developed innovative websites that present information in a clear and understandable manner for their customers, based on extensive consumer testing. Credit card issuers’ online portals have a host of features, which may include: past transaction history and the ability to dispute transactions; payment history, due dates and the ability to make and schedule electronic payments; the ability to retrieve past statements and adjust electronic or paper statement preferences; and customer service contact forums, among many others. All of this information, which is provided in addition to periodic statements and other written disclosures, helps consumers understand their credit card balances, features, and obligations.

 

Our members’ experiences suggest that consumers use different forms of technology for different things. For example, a consumer using a smart watch will expect to receive very short messages about their account, such as a recent transaction or balance update, while a consumer on a smartphone or tablet might use their device to make a mobile deposit or transfer funds.

Finally, consumers using a desktop computer might engage in more robust account management activities, such as bill pay administration, credit line increase requests, or balance transfers.

 

The Request states that, based on data from its 2013 CARD Act report, “most consumers who make on-line payments do not access their monthly statement and instead use online portals which do not contain these disclosures.”9 The Bureau’s data, however, does not identify how many consumers receive paper bills and may have viewed their monthly statements in paper form before making an online payment. Indeed, paper statements are typically the default

preference, and consumers must opt-in to stop receiving paper statements and only receive electronic statements. Consumers electing to receive only electronic statements are typically notified via email each time a new statement is available, making apparent the importance of these notices. Moreover, our members’ experiences do not suggest that consumers generally have complained about the information contained on electronic account management tools. We urge the Bureau to conduct additional research on the use of electronic account management tools and to measure the usefulness of any contemplated online disclosures.

 

We also urge the Bureau to refrain from imposing additional regulations that could constrain the development of consumer-friendly internet-based functionality. For example, disclosures required to be provided in space-constrained online environments might prevent consumer comprehension of other information presented on the same screen, causing more confusion than clarity. Should the Bureau find that additional online disclosure are needed, we encourage you to recognize the varied channels for online account access and avoid a one-size- fits all approach that does not recognize different consumer uses and expectations in electronic account access.

 

Expanding the Use of Digital Disclosures Under the E-SIGN Act. Generally, disclosures required by Regulation Z may be given electronically provided consumers consent to receive electronic disclosures in compliance with the E-SIGN Act.  In some instances, however, obtaining E-SIGN consent is unnecessary and duplicative. For example, a consumer who applies for a product electronically demonstrates a familiarity with electronic access to documents and should not be required to provide E-SIGN consent to receive account-opening disclosures electronically. In fact, Regulation Z requires that consumers accessing applications or solicitations online be given electronic disclosures in order for the disclosures to be considered timely.10 That is, the regulation already appears to recognize that a consumer who applies for a product electronically can access and view important account terms electronically.

 

In addition, we ask the Bureau to consider allowing consumers to provide verbal consent to receive electronic disclosures. Currently, our members interpret the E-SIGN Act as requiring consumers to give consent in a way that manifests their ability to access electronic disclosures. However, we believe this to be an outdated requirement and one that poses an unnecessary hurdle for consumers to receive disclosures through their preferred delivery channel. Consumer familiarity with digital banking, through both the online banking and mobile banking channels, has advanced significantly since the passage of the E-SIGN Act in 2000. Given this backdrop, consumers should be given another simple method to provide consent to receive electronic disclosures.

 

Regulation Z recognizes that E-SIGN Act consent is not practical in all circumstances and provides exceptions in two areas related to credit card cards: advertisements and, as noted, disclosures required on or with solicitations and applications.11   The Bureau should consider extending an exception12 to the E-SIGN Act consent requirements for disclosures required by

 

Need for Guidance on Clear and Conspicuous Electronic Disclosures. Requirements for clear and conspicuous electronic disclosures are an essential component of credit card regulations.13 However, the application of this standard to digital advertising poses challenges given the rapidly evolving digital landscape, including varied screen sizes and technologies that present information in different formats, such as scrolling banner ads, social media ads, and paid search engine results.

 

In space-constrained environments, it can be challenging to capture all of Regulation Z’s required “trigger term” advertising disclosures.14 For example, assume that a “paid search” advertisement, such as a paid link on Google shown in response to a search for “credit card,” contains a trigger term.  Clicking the link may lead to a landing page with the required triggered disclosures; but the advertisement itself may lack space to include a clear and conspicuous reference to how to find the required disclosures on the landing page.  We note that similar concerns resulted in an exemption for “banner ads” from the disclosure rules regarding the advertisement of promotional rates in 12 CFR 1026.16(g).  Accordingly, we ask that the Bureau exempt such space-constrained digital advertising from the trigger term disclosure rules located at 12 CFR 1026.16(b).

 

In addition, in a 2007 rulemaking the Board of Governors of the Federal Reserve (“Board”) considered the challenges that issuers face in providing clear and conspicuous disclosures to consumers on various electronic devices, including the “small screen of a hand- held electronic device.” 15 With respect to disclosures that mandate specific font sizes, the Board concluded that “the disclosures must be provided such that the required size requirement would be met when viewed on a typical home personal computer monitor.”16 We understand this to mean that disclosures on an electronic device with limited space – e.g., a smart phone – that meet the font size and formatting requirements set forth in Regulation Z comply with applicable law. The Board’s approach provides certainty for issuers and consumers alike. We ask that the Bureau adopt the Board’s position on the presentation of electronic disclosures and clarify that compliance with Regulation Z’s formatting and font size requirements for written disclosures, including the presentation of model forms,17 in any digital environment complies with applicable law. 

Finally, in addition to clarifications regarding the electronic presentation of Regulation Z’s disclosures, we encourage the Bureau to develop principles-based guidance on clear and conspicuous disclosures in a mobile environment, though we caution that any such guidance must be adaptable to the rapidly changing forms of digital media. For example, the FTC’s .com Disclosures guidance identifies the general elements of clear and conspicuous disclosures, one of which is the proximity of disclosures to advertising claims. It then provides general principles to evaluate proximity and a series of examples applying those principles.

 

B.     Grace Periods

 

Many card accounts offer consumers a grace period on purchases.  This means that a consumer who pays the new balance shown on the statement each billing cycle by the payment due date (i.e., a transactor) will not incur interest on purchases made in the previous billing cycle. A consumer who pays the minimum monthly payment or some other amount less than the new balance each month (i.e., a revolver) does not receive a grace period on purchases, meaning that purchases accrue interest from the date they’re added to the account. Regulation Z requires grace period terms to be provided to consumers at multiple times throughout a product life cycle, including on solicitations and applications, account opening disclosures, periodic statements, and, if applicable, credit card access checks.18

 

In the event a consumer does not pay the new balance in full prior to expiration and loses the grace period on purchases, Regulation Z offers two substantive protections. First, if a partial payment is made, finance charges may not be applied to the “portion of a balance subject to a grace period that was repaid prior to the expiration of the grace period.”19 Second, creditors are prohibited from imposing a finance charge on “balances for days in billing cycles that precede the most recent billing cycle”, a practice known as two- or double-cycle billing.20

 

In 2014, the Bureau issued a bulletin highlighting the potential for consumer confusion regarding the impact of low interest credit card promotional offers, such as 0% APR on balance transfers, on grace periods.21   The promotional balance is added to the balance on the account, and, accordingly, becomes part of the new balance that the consumer must pay in full to retain the grace period on purchases.  Concerns arise where such promotional offers are exercised, and the consumer continues to use the card for purchases, but does not pay the promotional balance in full in the next billing cycle. As a result, a transactor becomes a revolver, losing the grace period on purchases and incurring unexpected finance charges on purchases made after using the promotional offer. Our members have sought to address the Bureau’s concerns by enhancing

their promotional APR offer marketing materials to more prominently identify the impact such offers have on the grace period, particularly for consumers who continue to use their cards to make purchases.

 

C.    Add-On Products

 

The Bureau has issued a series of enforcement actions involving the sale of debt protection, ID theft protection, and credit score monitoring products.  These actions generally resulted from allegedly improper conduct by banks’ third party service providers, coupled with inadequate service provider oversight.  The Bureau’s enforcement activity has deterred the sale of add-on products among our members because they are no longer able to identify clear requirements for the compliant sale of such products.

 

This is still true today, notwithstanding the Bureau’s issuance of guidance on the sale of add-on products and the oversight of service providers.22   For example, while the sale of debt protection products is subject to explicit substantive disclosure requirements under rules issued by the Office of the Comptroller of the Currency (“OCC”) and under Regulation Z23, the Bureau has required parties to its debt protection product enforcement actions to provide disclosures beyond those specified in existing regulations.

 

To alleviate this lack of certainty, we recommend that the Bureau promulgate specific model disclosures and procedures for the sale of add-on products.  For example, industry representatives have developed alternative written and oral disclosures for debt protection products that could form the basis for model disclosures.24 The industry’s alternative disclosures were tested and found to improve consumer comprehension of the product’s pertinent features, at

statistically significant levels, when compared to disclosures required under current law and when compared to revised disclosures proposed by the Board.

 

D.    Debt Collection

 

In General.  The Associations support strong debt collection rules that ensure consumers only pay the debts they owe and treat consumers fairly whenever they are contacted about the repayment of a debt.  Any rules on debt collection practices must be balanced against the vital need for credit card issuers, and creditors generally, to collect delinquent debts. Few issues have a more direct bearing on the cost and availability of credit: if our members cannot recover outstanding debts owed to them, their costs will rise, consumer prices will rise, and fewer resources will be available for other important goals, such as innovation and cybersecurity.

 

Prior Comments on the Debt Collection ANPR.  In February 2014, the Associations filed comments on the Bureau’s Advance Notice of Proposed Rulemaking on Debt Collection Practices that explore debt collection practices in further detail.25

 

Specifically, and as discussed more fully in our February 2014 letter, the Associations urge the Bureau:

 

  • Not to subject first party debt collection efforts to the Fair Debt Collection Practices Act’s (the “FDCPA’s”) provisions, including those related to debt collection communications, given the substantially different issues that arise in third party debt collection;

 

  • To test the effectiveness of proposed revisions to debt validation notices;

 

  • To define “dispute” under the FDCPA and establish clear standards for the investigation of disputes and verification of debt; and

 

  • Not to create a central repository for the storage and sharing of information and documents related to consumer debt.

 

Practices Used to Minimize Losses Prior to Charge-Off. It is important to recognize at the outset that our members place a high value on strong and lasting customer relationships.

Credit card issuers have strong business incentives to foster their customer relationships. In many instances their relationship to the customer is a multifaceted one, covering a number of different products and accounts. Therefore, issuers are motivated to work with distressed borrowers in order to preserve this relationship and to provide them with an opportunity to become current on a delinquent debt.

 

Among the various practices used by our members to assist distressed borrowers, experience has shown that communicating with customers offers the best possible outcome. As a result, issuers have invested significant resources to provide consumers with a variety of communication channels to provide timely and important information, for example, account updates and notifications by phone, SMS text messages, email and mobile apps.

 

Once communication has been established, our members can offer distressed borrowers a variety of workout options catered to their specific needs. For instance, a customer who makes regular payments may be eligible to have the delinquent account brought current as a courtesy in accordance with Federal Financial Institutions Examination Council (FFIEC) guidance.26 Other customers may be eligible for reductions in interest rates or payment amounts, concessions on fees and interest, and debt settlements for less than the amount due.

 

 

Practices Used to Secure Recoveries Post-Charge-Off. In the post-charge-off context, there is no generally applicable approach adopted by issuers to secure recoveries on delinquent debt. Some issuers will engage the services of a third-party collection agency, while others use internal recovery processes for most or all of their delinquent accounts. Legal proceedings such as arbitration or litigation are also used on a case-by-case basis after other recovery efforts have failed. Finally, debt sales are used by some issuers to resolve a charged off account in an effort to recover some value that can be redeployed to other borrowers.

 

Use and Management of Third-Party Collection Agencies. There is no single model for how financial institutions interact with third-party collection agencies. Each issuer develops its own unique relationship with collection agencies based on a variety of factors. For instance, some small- to medium-sized institutions use third-party collection agencies because they do not have the resources to build or acquire the facilities, technology or modeling capabilities needed to efficiently manage large volumes of delinquent consumer debt obligations. Other issuers use third-party collection agencies to augment their resources during high-volume periods, such as during an economic recession, or as a method of business continuity planning to deal with cases when internal capabilities are disrupted. Issuers also use collection agencies as a form of comparative testing, where in-house collections will be tested against the agencies based on consumer resolution and recovery figures.

 

Given the importance of the customer relationship for all issuers, our members consider the supervision and management of third-party collection agencies a high priority. We have developed robust policies and procedures to ensure that our service providers, including collection agencies, treat our customers fairly and in full compliance with the law. And, we appreciate the efforts of our regulators to provide the industry with guidance on supervisory expectations related to vendor management.27 This guidance, in combination with industry practices, has created an effective framework for issuers to manage and oversee their relationship with collection agencies.

 

Sales of Charged Off Accounts to Debt Buyers. Similar to the experience of issuers with collection agencies, there is no one approach taken by issuers with respect to debt sales. Some issuers simply do not sell debt to third parties as a matter of company policy. Of those that do engage with debt buyers, once pre-charge-off collection efforts have been exhausted, the selling of consumer debt is generally viewed as a last resort. When it is simply not possible to resolve a delinquent debt with the borrower, these issuers will charge-off the account as a loss in accordance with accounting principles and then consider selling the debt.28

The manner in which an issuer sells charged off accounts varies and depends on the type of debt involved and the company’s internal policies and capabilities. In the context of credit card debt, there is a robust market for this type of debt, which may be one of the largest categories of debt sales.29 Therefore, a large market does exist for credit card debt, but the recovery rate rises and falls based on, among other factors, the age of the debt and the jurisdiction in which the card was issued.

 

However, more important than the question of whether a market exists for charged off credit card debt are the issuer’s policies and capabilities. Some issuers will devote resources to manage recoveries internally, even for charged off accounts, in order to meet a company policy objective, e.g., maintaining the customer relationship. Other issuers may have a different company policy that prioritizes the allocation of scarce resources towards lending activities; this would place a greater emphasis on recovering capital from charged off accounts. And, similar to the situation described above in the collection agencies context, certain issuers do not have the capacity to devote resources to manage charge-off accounts due to the attendant regulatory costs and burdens.

 

When an issuer does proceed to sell debt, the industry has adopted certain practices to meet supervisory expectations. Those practices include:

 

  • Developing and regularly reviewing internal policies and procedures concerning debt sale arrangements;

 

  • Identifying certain debt as inappropriate for sale (e.g., debt incurred as a result of fraud);

 

  • Conducting due diligence reviews of debt buyers;

 

  • Providing customers with notice when their debt is sold;

 

  • Transferring relevant information about the debt at the time of sale and on an as- needed basis;

 

 

  • Including representations and warranties concerning the accuracy of the data and media associated with the sold accounts;

 

  • Incorporating minimum service level agreements governing customer treatment; and

 

  • Prohibiting re-sales.

 

Coordination with States and Other Regulators. Recent legislation and regulation in this area offer the Bureau a variety of useful models.  The existence of such legislation and regulations also tempers the need for additional action by the Bureau.

 

For example, with respect to debt sales, the Associations encourage the Bureau to consider the California Fair Debt Buying Practices Act’s framework for the flow of information and documentation about debts that are sold, and to balance the costs and benefits of requiring additional information to be transferred with debt placements and sales.30

 

Also, recent guidance from the OCC identifies various risks that a national bank may face when selling debt, along with five specific supervisory concerns.31   To address those concerns, the OCC provides a series of supervisory expectations, including many of the practices described above.32

 

IV.            Conclusion

We thank the Bureau for the opportunity to provide comments on the credit card market.

In sum, we urge the Bureau to provide additional guidance on the delivery of clear and conspicuous online disclosures, and on compliant sales practices for add-on products. Regarding grace periods, we note that robust disclosures and substantive consumer protections already exist. Finally, we refer the Bureau to the Association’s comments filed in response to the Bureau’s 2013 Advanced Notice of Proposed Rulemaking on Debt Collection and urge the Bureau to coordinate with the states and other regulators when addressing debt collection.

 

***********

 

The Associations would be happy to provide the Bureau with additional information if you have any questions about the foregoing or otherwise in connection with your review of the credit card market.  Should you have additional questions, please feel free to contact Richard Foster with the Financial Services Roundtable at Richard.Foster@FSRoundtable.org or 202-589- 2424 or Dong Hong with the Consumer Bankers Associations at dhong@consumerbankers.com or 202-552-6360.

 

Sincerely yours,

 

 

Richard Foster                                                              Dong Hong

Senior Vice President & Senior Counsel for                Vice President, Regulatory Counsel Regulatory and Legal Affairs                              

Financial Services Roundtable                                       Consumer Bankers Association

1 As advocates for a strong financial future™, FSR represents 100 integrated financial services companies providing banking, insurance, and investment products and services to the American consumer. Member companies   participate through the Chief Executive Officer and other senior executives nominated by the CEO. FSR member companies provide fuel for America’s economic engine, accounting directly for $98.4 trillion in managed assets,

$1.1 trillion in revenue, and 2.4 million jobs.

2 The Consumer Bankers Association is the only national financial trade group focused exclusively on retail banking and personal financial services—banking services geared toward consumers and small businesses. As the recognized

voice on retail banking issues, CBA provides leadership, education, research, and federal representation for its members. CBA members include the nation’s largest bank holding companies as well as regional and super- community banks that collectively hold two-thirds of the total assets of depository institutions.

3 80 Fed. Reg. 14365 (March 19, 2015) (the “Request”).

4 80 Fed. Reg. 27294 (May 13, 2015).

5 Available at http://www.regulations.gov/contentStreamer?documentId=CFPB-2015-0007-  0011&attachmentNumber=1&disposition=attachment&contentType=pdf.

6 Available at http://www.jdpower.com/de/node/5916.

7 See Consumer Credit – G.19, Board of Governors of the Federal Reserve System, available at

http://www.federalreserve.gov/releases/g19/current/.

8 See Note 3.

9 See Note 3 at 14366.

10 12 C.F.R. Part 1026 Comment 60(a)(2)-6.ii (2015).

11 12 C.F.R. 1026.5(a)(1)(iii) (2015).

12 Authority for federal agencies to implement exemptions from the E-SIGN Act consent requirement is granted in  15 U.S.C. 7004(d)(1) (“A Federal regulatory agency may, with respect to matter within its jurisdiction, by regulation

or order issued after notice and an opportunity for public comment, exempt without condition a specified category or 

type of record from the requirements relating to consent in section 7001 (c) of this title if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers”).

13 See 12 C.F.R. Part 1026 Comment 5(a)(1)-1-3 (2015).

14 Under 12 CFR 1026.16, if a credit card advertisement includes certain “trigger” terms, a series of disclosures about the credit card must be included in the advertisement, including: any minimum, fixed, or transaction activity fees; periodic rates; and membership or participation fees.

15 72 Fed. Reg. 63462, 63471 (November 9, 2007).

16 Id.

17 For example, see 12 CFR Part 1026 Comment Appendix G-5.v (2015).

18 See 12 C.F.R. 1026.60(b)(5); 12 C.F.R. 1026.6(b)(2)(v); 12 C.F.R. 1026.6(b)(3)(i); 12 C.F.R. 1026.7(b)(8); and

12 C.F.R. 1026.9(b)(3)(i)(D) (2015).

19 12 C.F.R. 1026.54(a)(1)(ii) (2015).

20 12 C.F.R. 1026.54(a)(1)(i) (2015).

21 See Marketing of Credit Card Promotional APR Offers, CFPB Bulletin 2014-02 (September 3, 2014), available at

http://files.consumerfinance.gov/f/201409_cfpb_bulletin_marketing-credit-card-promotional-apr-offers.pdf.

22 See Marketing of Credit Card Add-on Products, CFPB Bulletin 2012-06 (July 18, 2012), available at  http://files.consumerfinance.gov/f/201207_cfpb_bulletin_marketing_of_credit_card_addon_products.pdf,        and Service Providers, CFPB Bulletin 2012-03 (April 13, 2012), available at  http://files.consumerfinance.gov/f/201204_cfpb_bulletin_service-providers.pdf.

2312 C.F.R. Part 37(2015) and 12 C.F.R. 1026.4(d) (2015).

24 See A Consumer Disclosure Concept Test for Debt Protection Products, McIntyre & Lemon, PLLC and Barnett, Sivon & Natter, PC (May 2012), attached to comments submitted by the same law firms on the Bureau’s Policy to Encourage Trial Disclosure Programs; Information Collection Docket No. CFPB-2012-0046 (February 15, 2013),

available    at    http://www.regulations.gov/contentStreamer?documentId=CFPB-2012-0046-  0012&attachmentNumber=1&disposition=attachment&contentType=pdf.

25 See American Bankers Association, Consumer Bankers Association, and Financial Services Roundtable joint comments on Advance Notice of Proposed Rulemaking on Debt Collection Practices; Docket No. CFPB-2013-0033,

RIN 3170-AA41 (February 28, 2014), available at  http://www.regulations.gov/contentStreamer?documentId=CFPB-2013-0033-  0328&attachmentNumber=1&disposition=attachment&contentType=pdf.

26 This practice is known as “re-aging”. See Uniform Retail Credit Classification and Account Management Policy, 65 Fed. Reg. 36903, 36905 (June 12, 2000).

27 See Bulletin 2013-29, Risk Management Guidance, Third-Party Relationships (OCC, Oct. 30, 2013), FIL-44-

2008, Third-Party Risk, Guidance for Managing Third Party Risk (FDIC, June 6, 2008), Guidance on Managing Outsourcing Risk, (Board of Governors of the Federal Reserve System, December 5, 2013), and Bulletin 2012-03, Service Providers (CFPB, April 13, 2012).

28 The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision jointly issued the “Account Management and Loss Allowance Guidance for Credit Card Lending” governing accounting principles for charged off accounts (January 8, 2003) available at http://ithandbook.ffiec.gov/media/28315/occ-bl2003-  1_account_manag_loss_allow_guid.pdf.

29 The Structure and Practices of the Debt Buying Industry, FTC at ii (January 2013), available at

https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buying-  industry/debtbuyingreport.pdf.

30 Fair Debt Buying Practices Act, 2013 Cal. Legis. Serv. Ch. 64 (S.B. 233) (Ca. 2013).

31 See Office of the Comptroller of the Currency, Consumer Debt Sales, OCC Bulletin 2014-37 (August 4, 2014),

available   at   http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-37.html.

32 The OCC’s guidance requires, among other things: i) internal policies and procedures aligning debt sales with the

bank’s strategy and risk profile, the transfer of detailed and accurate information to debt buyers at the time of sale, and timely notice to customers and credit bureaus that the debt has been sold; ii) the performance of due diligence when selecting a debt buyer, including ensuring the buyer has adequate experience, is financially sound, and does not have excessive consumer complaints; iii) contracts that provide for the confidentiality and security of information, limitations on the debt buyer’s ability to re-sell the debt, and compensation provisions that do not incentivize improper behavior; iv) the provision of comprehensive information at the time of sale regarding each debt, including: a copy of the signed contract; copies of all, or the last 12, account statements; account numbers; v) all amounts claimed, including principal, interest, and fees; vi) the name of the issuing bank and, if applicable, the store or brand name; vii) the last payment, date of default, and amount owed; viii) any unresolved disputes; ix) any past collection efforts; and x) the debtor’s name, address, and social security number; and a ban on certain types of debt sales.