WASHINGTON, Sept 3 (Reuters) - The top U.S. consumer protection regulator issued a stern warning to credit card companies on Wednesday, saying it believes some of them are deceiving customers about hidden fees associated with certain promotional offers.
The Consumer Financial Protection Bureau’s director, Richard Cordray, stopped short of saying whether his agency may pursue any enforcement actions against credit card companies.
But he said that hitting customers with surprise fees is illegal and urged companies to make sure they clearly disclose how these promotional offers work.
“We are putting credit card companies on notice,” he said in a press release.
The marketing materials at the heart of the CFPB’s warning center around interest-rate offers, such as balance transfers or deferred interest deals.
Typically, a consumer is charged a fee to transfer a balance or required to make a purchase in order to get a lower interest rate. But consumers may not always be told after they transfer their balances to the new card that additional purchases may incur interest right away.
“The Bureau believes some companies’ marketing materials do not clearly disclose that consumers must pay off the promotional balance by their due date to avoid racking up unexpected interest charges on routine purchases for which they were not charged interest previously,” the CFPB said in the press release.
“For some consumers, these surprise charges can make the cost of transferring a balance more expensive than revolving the same balance on their existing card.”
The bureau did not name any credit card company.
The CFPB was created by the 2010 Dodd-Frank Wall Street reform law following the global financial crisis. Its mission is to protect consumers from abuses or deceptive practices surrounding certain financial products such as credit cards and payday loans.
A copy of its new bulletin warning credit card companies is available here: here
The CFPB on Wednesday also released a list of tips for consumers to help them understand how grace periods work and how to evaluate credit card promotional offers. (Editing by Jonathan Oatis)