issuer currently considers when determining the APR applicable to similar , new consumer credit card accounts . Examiners found the following violations :
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Credit Card Accounts
Billing Error Resolution
Failing to complete the following billing error resolution steps caught the attention of examiners for many financial institutions :
• Mailing or delivering written acknowledgments to consumers within 30 days of receiving a billing error notice .
• Resolving disputes within two complete billing cycles after receiving a billing error notice , due to human and system intake errors .
• Reimbursing consumers after billing errors were determined to have occurred as consumers asserted .
• Mailing or delivering correction notices to consumers resolving billing errors in their favor .
• Conducting reasonable investigations after receiving billing error notices due to human errors and system weaknesses .
• Providing inaccurate explanations to consumers as to why the creditor denied the consumers ’ billing error claims in whole or part , or in some instances , providing no explanation at all .
• Providing consumers with the evidence the creditor relied upon to determine no billing error occurred , after the consumers requested the evidence to understand the creditor ’ s determination .
Rate Re-Evaluation
Per Regulation Z , after increasing a consumer ’ s annual percentage rate ( APR ), credit card issuers must periodically assess whether it is appropriate to reduce the account ’ s APR ( s ). Issuers must first re-evaluate each such account no later than six months after the rate increase , and at least every six months thereafter . In re-evaluating each account , the issuer must review the factors on which the rate increase was originally based or the factors the
• Creditors conducted rate re-evaluations on the acquired accounts , but failed to reduce APRs to the appropriate level . Specifically , the creditors were unable to identify the lowest rate applicable to the acquired accounts because they failed to gather this data from the sellers during the acquisition . This rate data was necessary to the creditors ’ rate reevaluation analysis and , as a result , creditors did not properly re-evaluate accounts as required by Regulation Z , causing monetary harm to consumers who did not receive APR rate reductions .
• Creditors failed to conduct re-evaluations of rate increases once every six months after certain APR increases on acquired accounts . This resulted in monetary harm to consumers who were not included in creditors ’ rate re-evaluation process and did not receive potential rate reductions .
• When evaluating rate reductions , based on the factors considered when determining the APRs applicable to similar new accounts , creditors considered certain minimum rates that formerly applied to their credit card accounts ; however , at the time of their rate reevaluation analyses , because these minimum rates no longer applied to the relevant credit card accounts , using them in creditors ’ rate re-evaluation analyses violated Regulation Z .
Deceptive Advertising of Interest-Free Financing
Entities engaged in deceptive acts or practices by advertising the interest-free financing feature of their credit card without adequately disclosing the preconditions for obtaining the financing . To receive the interest-free financing , consumers needed to satisfy two preconditions , including purchasing products at a business partner ’ s store or website and agreeing , at checkout , to pay for the product in monthly installments . Based on the net impression of the advertisements , consumers were misled about the preconditions necessary to receive the interest-free financing promotion , which were material to consumers ’ decision to purchase the products with the credit card .
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