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The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The NCUA has issued a proposal revising the requirements for use of the official insurance sign and official advertising statement to permit insured credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements.

The proposed rule will give credit unions added flexibility in advertisements. As compared to the current requirement, credit unions will be able to use the shortened form or the official insurance sign in advertisements as alternatives to the basic official advertising statement; under the current rule, credit unions may only use the shortened form if they also include the official sign.

Comments on this proposal must be received on or before June 27, 2008.

The OCC has entered into a settlement agreement with Wachovia Bank, National Association that directs the bank to make restitution to consumers harmed by its relationships with several telemarketers and third party payment processors.

According to the OCC’s press release, the bank has agreed to make restitution to all consumers harmed who have not been previously reimbursed and who file claims under the processes set out in the settlement. The estimated maximum amount of potential claims is $125 million; actual claims may result in restitution in a lesser amount. In addition to the restitution payments, the bank will also be required to contribute approximately $8.9 million to consumer education programs directed at the elderly, and to pay a $10 million civil money penalty to the U.S. Treasury. In reaching the settlement,  the OCC concluded that the bank engaged in unsafe or unsound practices during the course of its relationships with the payment processors and telemarketers, and unfair practices within the meaning of the Federal Trade Commission Act.

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