We issue a credit card and provide variable rate disclosures. The disclosures provide an APR and then say "Your APR may vary". "The Annual Percentage Rate may vary quarterly and may be x% above the US Bank Prime but will not exceed 18%." We haven't changed the rate since May 2006. For a while we were below prime and as it has dropped, our "fixed" rate is now well above prime plus the margin.

So, we disclose as variable and operate as fixed with the option to change the rate when we want.

I don't think this is right, and need some regulatory backup for my argument.

Am I off base on being concerned?

You need to be talking to an attorney. You could very well (most likely) have a breech of contract and you need to be speaking to the attorney to determine what your remedies are to cure it.