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Compliance Challenge CARD Act 21-day provision
WASHINGTON (8/13/09)--In this month’s Compliance Challenge, the Credit Union National Association (CUNA) addresses how credit unions can best comply with portions of the recently enacted CARD Act that require 21 days of advance notice for payments to all open-ended credit accounts. CUNA cannot suggest any single method of dealing with the 21-day requirement, but its recently-published memo does provide several options taken by some credit unions. Those options include changing due dates to establish a uniform payment due date, printing the current and following month's payment due dates on the account user's periodic statement, and retaining the existing due dates, but providing additional periodic statements. However, as CUNA has said in the memo, “every compliance option available to credit unions involves substantial costs and/or disruptions to business practices.” While changing due dates to establish a uniform payment due date would mirror how legislators and the Fed envisioned compliance would work for credit card accounts, such a change would require systemic changes for many credit unions and could particularly challenge larger credit unions that send out periodic statements in cycles throughout a given month. Printing current and future payment due dates on an account user's periodic statement would likely be the cheapest and easiest way to meet compliance requirements, but credit union members may need substantial education about these changes to avoid confusion. In addition, the Fed's staff believes this method may be contrary to the intent of the law and may in the future indicate in a more formal manner that this option is not compliant with the rule. Preserving existing due dates while adding additional periodic statements is another option, but could substantially increase a credit unions mailing and processing expenses. The Fed also has allowed some leeway for credit unions that cannot meet the required compliance deadline of Aug. 20 by providing a “transitional compliance option of including an insert or language” within periodic account statements. To see the full compliance challenge, use the resource link.


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