The Definition of a 'Card Issuer' Answered by BOL Gurus Mary Beth Guard and Jack Holzknecht Bios
Question: What is the definition of a 'card issuer' for purposes of section 114 (red flags)? Our debit cards are issued through the ___________ network and mailed directly to our customers by ___________ however, we (the bank) take the application at account opening. In this instance, who is the issuer - the bank or _________?
Also, if we provide debit and/or credit cards on behalf of a third-party, are they the card issuer or us for the purposes of 334.91(a)?
Answer: The FCRA defines the term "card issuer" as:
a credit card issuer, in the case of a credit card; and
a debit card issuer, in the case of a debit card.
(Not real helpful, is it?)
The Commentary to the Truth in Lending Act states, "An agent of a card issuer is considered a card issuer. Because agency relationships are traditionally defined by contract and by state or other applicable law, the regulation does not define agent. Merely providing services relating to the production of credit cards or data processing for others, however, does not make one the agent of the card issuer. In contrast, a financial institution may become the agent of the card issuer if an agreement between the institution and the card issuer provides that the cardholder may use a line of credit with the financial institution to pay obligations incurred by use of the credit card."
In our view, in the examples given in the two questions above, both the financial institution (who has the relationship with the customer and through whom the customer applied) and _____________ (from whom the institution procures the cards) would be considered issuers.
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