CARD Act's Ability to Pay Proposal Ignites Public Policy Debate


President Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) on May 22, 2009. The CARD Act is intended to increase the disclosures associated with credit cards and prevent practices thought to have contributed to overuse and possible misuse of cards by consumers. One notable feature is a prohibition on extending credit to a consumer under age 21 unless he or she can demonstrate an independent means of repaying the credit or obtains a co-signer over age 21 with the ability to repay the debt. Considerable opposition to the “ability to pay” rule was raised by card issuers, the public, consumer groups, and other industries, including retailers, bankers, and providers of card processing services.

While the Fed eventually adopted its proposed ability to pay rule (in March 2011), this article (co-authored with Manley Williams, Esq., for publication in the American University Law Review) outlines the CARD Act’s ability to pay controversy, demonstrating that attitudes about access to individual consumer credit implicate firmly-held but often non-financially-based beliefs that reflect very different approaches to financial responsibility.

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