Published: October 2014

Consumer protections weakened after repealing Reg. AA

Banking regulatory agencies repealed Regulation AA in August. Reg. AA bans banks from unfair and deceptive acts as described in the FTC Credit Practices Rule (like pyramiding late fees, taking security interests in household goods, etc.). In its stead, the agencies jointly issued the Interagency Guidance regarding Unfair or Deceptive Credit Practices (the Guidance), which clarifies to banks and financial service providers that the credit practices described in these former regulations are still not permissible. Consumer Action joined coalition advocates in seeking a stronger rule that mirrors and improves upon the protections originally included in Regulation AA.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repealed the Federal Reserve Board's authority to write rules that address unfair or deceptive acts or practices, contained in Regulation AA (Reg. AA). Reg AA was designed to address practices by banks that were perceived as unfair or deceptive. Regulation AA established the procedures used to process complaints registered by bank customers.

Several banking regulatory agencies have jointly issued guidance to banks, saving associations, and federal credit unions: The Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (CFPB), the National Credit Union Administration (NCUA) and the Office of the Comptroller of Currency (the OCC). The guidance explains that the repeal of Reg. AA should not be construed as approval of prohibited practices addressed in the regulations, and that the CFPB may still enforce such rules under its general mandate to prohibit unfair and deceptive practices.

The Interagency Guidance Regarding Unfair or Deceptive Credit Practices (the Guidance) is applicable to banks, savings associations, and Federal credit unions issued under the FTC Act and is designed to emulate the FTC’s Fair Credit Practices Rule. These regulations typically concern issues such as misrepresentations surrounding cosigner liability, certain prohibited terms in consumer contracts, and the improper use of late fees.

In a letter to the banking agencies, Consumer Action joined other advocates in commending the issuance of the Guidance, but explained overall disappointed that Regulation AA was repealed. The coalition's letter outlines three goals it hopes are implemented in order to further strenghten consumer protections in the absence of Reg. AA:

1. The Consumer Financial Protection Bureau (“CFPB”) immediately issues an interim final rule re-adopting Reg. AA applicable to financial institutions.
2. Banking agencies improve the language of the Guidance so that it clearly prohibits practices that are prohibited under Reg. AA.
3. The CFPB issues regulations, and the banking agencies to issue guidance, to address more modern unfair practices in the credit marketplace.

Lead Organization

National Consumer Law Center (NCLC)

More Information

For more information, please visit NCLC's website.

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Consumer protections weakened after repealing Reg. AA   (Reg_AA_FRB-10-27.pdf)