Reg Z Proposal: Limitations on Fees Related to Method of Payment; H.R. 3606

Posted by Steve Van Beek

The proposed Section 226.10(e) implements Section 127(l) of the Credit CARD Act.  Proposed 226.10(e) would not allow a separate fee to be charge for accepting payment on a credit card account - unless the payment was processed in an expedited manner by a member service representative.  The prohibition covers payments made by telephone (including a voice response unit), online or through the mail.

The Federal Reserve has proposed comments to the section to provide clarification.  Comment 10(e)-1 clarifies that a "separate fee" is one assessed to a member for making a single payment on an account (but does not include late payment fees as they are assessed for other reasons).  Comment 10(e)-2 defines "expedited" as a payment applied to the account on the same day or the next business day if received after the credit union's cut-off time.

Comment 10(e)-3 clarifies that consumer/member service representative does not include a voice response unit (VRU) or other automated process for accepting payments.  Rather, the payment must be expedited by an actual, live representative of the credit union before a fee could be charged.

This section is short (5 pages combined) and the Federal Reserve does a great job of describing and explaining this prohibition.  Remember, in some areas of the proposal the Federal Reserve's hands are tied due to the language of the Credit CARD Act.  Section 226.10(e) is one of these situations where the Fed had little wiggle room because Congress made it clear they did not want fees charged unless a live person expedited the payment.  

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Yesterday, the House passed, by voice vote, H.R. 3606 which would make a technical correction to the Credit CARD Act that would clarify that the 21-day notice requirement only applies to credit card statements and not all open-end lending.  NAFCU will continue to work with the Senate to push this important piece of legislation.    

  

Comments

[Joanne]

So, all payments will be required to be "posted" same business day regardless of cut off time in an other provision of the act. If payment comes after cut off and FI is required by law to expedite (so it is credited the same day) we can charge a fee???? Am I missing something?

[Southernmost Sue]

Thank you so much for your hard work on getting the changes to the 21-day rule through the House. You rock!

[Steve Van Beek]

Joanne, I do not read the new changes as requiring the credit union to expedite payments. The changes to 226.10 will require credit unions to credit payments the date of receipt - but the staff commentary clarifies that the credit union does not need to post the payment on that date as long as the payment is accurately credited to the account as of the date of receipt. The commentary also indicates that the "date of receipt" is the date the creditor receives the payment.

That staff commentary and the text of 226.10 can be seen here: http://nafcucomplianceblog.typepad.com/sections/PaymentsGenerally.pdf

[Lisa Lowe]

Are we able to fee card holders Visa's when they are requesting a replacement cards, pin reissues, fed-x card to them, and statement copies?

[Steve Van Beek]

Lisa,
The restriction of 226.10(e) seeks to restrict the charging of a fee for accepting a payment unless it is expedited by a member service representative of the credit union.

This section would not prevent fees in other situations that are unrelated to accepting a payment from a member.

[Lisa Lowe]

Thanks Steve we just wanted to make sure we correct on this.