On December 7, 2011, the Consumer Financial Protection Bureau (“CFPB”) released a two-page draft of what it described as a “prototype” credit card agreement in connection with its “Know Before You Owe” campaign. Simplifying credit card agreements is a policy initiative the CFPB describes as a priority. Over the past year, CFPB officials have met with consumer groups and some industry representatives to create the prototype agreement, and they are expected to continue to do so. The CFPB requests comment on the draft agreement and indicates that, over the next few months, the CFPB will work to improve the two-page agreement with feedback from consumers and the industry.

While use of the agreement by credit card issuers would be optional at this point, the agreement is intended to ensure that consumers understand the pricing, risks, and terms of the credit card. In particular, the CFPB states that the agreement is aimed at making it easier for consumers to comparison shop. The agreement, however, raises significant Truth-in-Lending compliance issues and potential exposure issues for issuers in private litigation.

The two-page agreement provides three basic sections, in a tabular format, entitled (1) Costs, (2) Changes, and (3) Additional Information.