I'm an attorney at a bank that is starting up a new credit card product. To make sure everything is working operationally, certain employees are being selected for a "friendly" test. These employees are going to be asked to use the card as they would any other, including calling customer service and disputing inaccurate billings. It is my understanding that a CMA will be governing these accounts, and there is no change to underwriting to issue the accounts or assign lines.

My question: Someone mentioned needing a 1-page contract between the bank and each of the friendlies which essentially holds them harmless for participating. I'm struggling a bit to figure out why this is needed since a CMA will govern each account, and friendlies have billing rights, credit reporting dispute mechanism, etc. to protect their consumer interests. Do other banks do such a contract aside from the CMA? If so, what sort of protections would it typically contain?

I've partcipated in many tests as a bank employee throughout my years of experience in banking and never had a contract with the bank. My opinion is, if you have the necessary agreements/disclosures in place, you should be OK.

NOTE: These opinions are mine, and not those of my employer.

We did several of these while I was at the bank. We went into it knowing it was a beta test. No contracts or agreements were needed. Perhaps ignorance was bliss. Just be sure that credit reporting isn't fouled up so there is no long term problem. When everything is within your walls, it is easily correctable.

RJM and Andy, thanks for your responses. Unfortunately, new facts have become known to me and I need to resolicit opinions. Here are the new facts:

(1) Appx 16 people will be volunteering to participate (6 from our bank, 10 from our cobrand partner)
(2) No application/credit underwriting will be done.
(3) No Schumer box/CMA will be provided.
(4) Only principle balances will be expected to be repaid; while finance charges and fees will be generated on monthly statements, these will be reversed.
(5) Even though monthly statements will be sent computing and disclosing a min pay, these test subjects will be told they need to pay all balances by the end of the test; in appx 4 months.
(6) Test credit lines will be standard for all test subjects.

I was told by marketing ops the reason we aren't doing the normal credit disclosures is we are not yet set up to provide account terms and conditions (have not been even been created yet) and they just want to test merchant-Association-processor system functionality at this point to make sure all purchases at a variety of merchants are in fact posting to accounts.

Here are my questions:

(1) Since there will not be an interest component, can we get around Reg Z compliance (no Schumer, no CMA)? My initial thought was it should not apply to a test plan like this which does not contain an interest component, however there is a vague statement in 226.1(c)(2) that certain Reg Z provisions may apply even to non-finance charge plans, without specifying.

(2) Is it common to involve test subjects outside of ones own bank for this sort of test?