Store-Card Regulations Not as Tough as Feared
American Banker | Tuesday, January 26, 2010
By Maria Aspan
Store cards have dodged a bullet.
The Federal Reserve Board's latest round of credit card rules require retailers and their issuing partners to consider some additional information about customers who apply for private-label or cobranded cards at the cash register, including their income and existing obligations.
Many in the industry had braced for worse.
Specifically, retailers had worried they would be required to verify income or assets by collecting copies of customer pay stubs, tax returns or bank statements. But the final version of the rule, which the Fed released this month, allows issuers to estimate income and assets using computer models.
"I think they are all breathing a big sigh of relief," said Steven Jacowitz, a former credit executive at Saks Fifth Avenue, Bloomingdale's and Filene's, and now the director of alliance development at Auriemma Consulting Group.
Under the Credit Card Accountability, Responsibility and Disclosure Act, beginning Feb. 22 all issuers granting line increases or new accounts will have to consider the applicant's ability to make the minimum monthly payment. Part of the Fed's rules — all 1,155 pages of which landed on Jan. 12 — defines "ability to pay," and says the assessment must include "a review of the consumer's income or assets as well as current obligations." (more)
By Maria Aspan
Store cards have dodged a bullet.
The Federal Reserve Board's latest round of credit card rules require retailers and their issuing partners to consider some additional information about customers who apply for private-label or cobranded cards at the cash register, including their income and existing obligations.
Many in the industry had braced for worse.
Specifically, retailers had worried they would be required to verify income or assets by collecting copies of customer pay stubs, tax returns or bank statements. But the final version of the rule, which the Fed released this month, allows issuers to estimate income and assets using computer models.
"I think they are all breathing a big sigh of relief," said Steven Jacowitz, a former credit executive at Saks Fifth Avenue, Bloomingdale's and Filene's, and now the director of alliance development at Auriemma Consulting Group.
Under the Credit Card Accountability, Responsibility and Disclosure Act, beginning Feb. 22 all issuers granting line increases or new accounts will have to consider the applicant's ability to make the minimum monthly payment. Part of the Fed's rules — all 1,155 pages of which landed on Jan. 12 — defines "ability to pay," and says the assessment must include "a review of the consumer's income or assets as well as current obligations." (more)
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