CFPB Affirms That Some Disclosures are Only for Credit Card Accounts

We finally have a frosty morning in Washington, DC, but my heart is warmed for an unexpected reason – the CFPB sided with a financial institution on a legal issue. In fact, the judge in Lopez v. Bank of Orrick, et al. dismissed the case after the CFPB weighed in at his request.

Let’s go back to the beginning. In 2022, Jose Lopez obtained an open-ended line of credit (not a credit card account) from the Bank of Orrick through Kendall Bank. Lopez alleged that the banks were required to send him disclosures required under Regulation Z and the Truth in Lending Act (TILA), specifically 15 U.S.C. 1637(b)(11), which includes the amount of time it would take to repay the loan if he only paid the monthly minimum. 

At the request of U.S. District Judge Manish Shah of the Northern District of Illinois, the Consumer Financial Protection Bureau submitted an amicus brief on July 1, 2024. The brief clarified that under Regulation Z, which implements TILA, as well as amendments to TILA in the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), the repayment disclosure requirements cited by Lopez (15 U.S.C. 1637(b)(11)) only apply to credit card accounts under open-end (not home-secured) consumer credit plans. In its brief, the Bureau cited the proposed rule by the Federal Reserve from October 2009 (74 Fed. Reg. 54136) amending Regulation Z to implement the Credit CARD Act. 

The rule states: 

“Under the Credit Card Act, the repayment disclosure requirements apply to all open-end accounts (such as credit card accounts, HELOCs, and general purpose credit lines). As discussed above, in the January 2009 Regulation Z Rule, the Board limited the minimum payment disclosures required by the Bankruptcy Act to credit card accounts. For similar reasons, the Board proposes to limit the repayment disclosures in the Credit Card Act to credit card accounts under open-end (not home-secured) consumer credit plans, as that term is defined in proposed section 226.2(a)(15)(ii).”

Regulation Z applies to qualifying loans made to natural persons and outlines the disclosure requirements for lending institutions throughout the loan lifecycle, including for applications, account opening information, finance charges, and changes in terms. Although the Credit CARD Act created additional disclosure requirements, through regulatory action, the application of those requirements was limited specifically to credit card accounts. The CFPB’s amicus brief clarifies that those additions, which statutorily might be read to apply to all open-ended credit, were in fact implemented solely for credit card accounts. 

This case underscores the many differences in disclosure requirements depending on the different product in question. It's important to stay informed about these distinctions and to regularly review your institution's disclosure practices to ensure they align with the specific requirements for each product type. It also highlights the value of keeping abreast of CFPB interpretations and, the admittedly rare, especially in support of financial institutions, amicus briefs, as they can provide valuable clarity on regulatory expectations and potentially impact legal outcomes.