Military Lending Act (MLA) DoD Interpretive Rule – Bona Fide Credit Card Fee Safe Harbor

Compliance > Lending > Service Members > Military Lending Act
Q:  Under 32 CFR 232.4(d)(3)(ii), may creditors rely on commercially compiled sources of information in conducting calculations necessary for the conditional reasonable bona fide credit card fee safe harbor?
 
A:  Generally, yes.  The July 2015 Final Rule intends to provide a firm, yet flexible, adaptable standard allowing credit card issuers to exclude bona fide and reasonable credit card fees from the calculation of the MAPR.  Under the safe harbor set forth in § 232.4(d)(3)(ii), creditors are allowed to exclude a reasonable bona fide fee charged to a credit card account from the calculation of the MAPR, where that fee is less than or equal to an average amount of a fee for the same or a substantially similar product or service charged by 5 or more creditors, each of whose U.S. credit cards in force is at least $3 billion in an outstanding balance (or at least $3 billion in loans on U.S. credit card accounts initially extended by the creditor) at any time during the 3-year period preceding the time such average is computed.  As the Department stated in the supplementary information to the July 2015 Final Rule, the Department believes that information on credit card fees imposed by large credit card issuers is widely available.  Moreover, the Department stated in the supplementary information to the July 2015 Final Rule that the amount of outstanding credit card loans is available in both Securities and Exchange Commission filings as well as Call Reports.   Nevertheless, nothing in 32 CFR part 232 prohibits a credit card issuer from relying on information sources compiled in commercially available databases or other industry sources in making safe harbor calculations.  However, the safe harbor under § 232.4(d)(3)(ii) is available only if the amount of the fee is actually less than or equal to an average amount of a fee for the same or a substantially similar product or service charge by 5 or more creditors each, of whose U.S. credit cards in force is at least $3 billion in an outstanding balance (or at least $3 billion in loans on U.S. credit card accounts initially extended by the creditor) at any time during the 3-year period preceding the time such average is computed.
 
 
 

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