The CFPB has its eye on your advertisements, especially credit card promotional rates

by: Jane Pannier

When it comes to advertising, the Consumer Financial Protection Bureau has its eye on financial institutions. And with the coming holiday season and the spike in advertising that frequently accompanies it, expect the CFPB to be on the lookout for all kinds of false claims, but for one kind in particular. Recently, the CFPB has identified some advertising of credit card promotional rates as deceptive and/or abusive to consumers, and they’ve issued Bulletin 2014-02 to combat this issue.

Specifically, the CFPB is focused on credit card issuers that advertise that consumers can, for a limited time, transfer existing credit card balances and receive a zero percent or very low promotional APR. It sounds like a great deal, but the ads sometimes do not make clear that the consumer will only receive the zero percent or other low interest rate if they pay off all of the transfer balance plus any new charges they make within the grace period.

In other words, consumers often believe that under these offers the balance they transfer will receive the zero percent or other low rate automatically, regardless of whether it’s paid in full within the grace period, and that only new charges need to be paid within the grace period to qualify for the promotional rate during the promotional period.

As a result, the CFPB states that credit card issuers that do not clearly disclose that these promotional rates may come with other contingent costs are engaging in deceptive and/or abusive behavior in their credit card advertising.


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