Wednesday, October 03, 2012 4:47 PM
Verne, B. Michael
Ordinary course exemption as applied to credit card receivables
Wewould like to ask you about the ordinary course exemption and its availabilityin the circumstances described below. We believe that it would be available.
CompanyA is a retailer who issues private label and general purpose credit cardsthrough two banks that it owns. It is proposing to sell its portfolio ofgeneral purpose credit card receivables to Company B. Company A will continueto issue, from one of its banks, other types of private label credit cards tobusiness customers and non-profit customers; it will also offer debitcards and pre-paid cards as well. But it will no longer issue the types ofcredit cards represented by the portfolio being sold. We do not believe thatCompany A is exiting the business of issuing credit cards to its customers andtherefore the ordinary course exemption would be available. We think this viewis consistent with a number of informal opinions addressing acquisitions ofreceivables relating to the credit card business, and are seeking confirmationthat this is still the view of the PNO.
Wouldyou agree or would you need more details about the cards that will still be offeredor the informal opinions we are relying on? (Please note that the FTC webpage informal interpretations search function seems to be having difficultiestoday, so I was unable to list the opinions we have found in our review.)