The Consumer Financial Protection Bureau (CFPB) has begun seeking public input on a simplified credit card agreement prototype. Intended by the CFPB to serve as “a thought starter,” the prototype is accompanied by a statement on the CFPB’s Web site that it “is not a model form, and use is not mandatory.”

Consisting of two pages, the agreement is divided into three sections with the headings “Costs,” “Changes,” and “Additional Information.” For definitions of underlined words or phrases, the agreement refers consumers to a separate document containing the “Consumer Financial Protection Bureau Definition of Credit Card Terms.” According to the CFPB, the definitions were formulated “based on standard industry usage and practices.”

The CFPB’s expectation is that the definitions “will be housed online in a place where consumers can readily access them” and, for consumers without Internet access, they “will be available from their issuer in printed form.”

The prototype agreement does not include or make any reference to the tabular account-opening disclosures required by the Truth in Lending Act (TILA) and Regulation Z. However, the tabular disclosures that are included in the prototype essentially duplicate (albeit in different format) much of the information in the required disclosures. Thus, it is unclear what the CFPB intends for the existing tabular disclosures.

Many common contract terms are incorporated into the definitions, such as the events that constitute a default, payment instructions, and the effect of an assignment. (The CFPB’s incorporation-by-reference approach raises serious enforceability concerns that we will be discussing in a post on our blog, the CFPB Monitor.) The CFPB’s Web site allows visitors “to learn more” about a particular section of the agreement by clicking on that section. The additional information provided to visitors who exercise that option includes consumer advice about credit card usage and features, such as advice about annual fees, steps that can be taken to lower interest charges, and various consumer rights.

The prototype also contains no reference to arbitration, a common feature of credit card agreements. Whether this omission presages the CFPB’s attitude toward binding pre-dispute arbitration remains to be seen.

The credit card agreement prototype represents the third addition to the CFPB’s “Know Before You Owe” project, in which the CFPB is already seeking comments on a financial aid offer form for student loans, and on mortgage loan disclosures (combining the disclosures required by TILA and the Real Estate Settlement Procedures Act). The CFPB has identified simplification of credit card agreements as a priority item since its inception in 2010. In addition to posting the prototype credit card agreement on its Web site, the CFPB has stated that it plans to pilot test the prototype with Pentagon Federal Credit Union “to get on-the-ground consumer feedback.”

Ballard Spahr’s Consumer Financial Services Group produces the CFPB Monitor, a blog that focuses exclusively on important CFPB developments. To subscribe, use the link provided to the right. The group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

For more information, please contact Practice Leader Alan S. Kaplinsky, 215.864.8544 or; Practice Leader Jeremy T. Rosenblum, 215.864.8505 or; John L. Culhane, Jr., 215.864.8535 or; Christopher J. Willis, 678.420.9436 or; Barbara S. Mishkin, 215.864.8528 or; or Mark J. Furletti, 215.864.8138 or


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