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Card issuers get an earful from House Democrats

Daniel Ray

The practices of some credit card issuers took another whipping Thursday on Capitol Hill, as House Democrats, academics and advocates took turns labeling some of the industry’s practices as “tricks and traps” intended to shake down innocent consumers. The occasion was the first hearing on the Credit Cardholder’s Bill of Rights, a piece of legislation filed by Rep. Carolyn Maloney, a New York Democrat and the chair of the House Subcommittee on Financial Institutions and Consumer Credit. The legislation has lined up 80 co-sponsors, she says.

In many ways the discussion fell along party lines, with consumer advocates teaming with Democrats to assail universal default, double cycle billing and due dates that move around more often than a ne’er-do-well relative.

“This is a hearing about the kinds of tricks and traps that undermine a competitive market,” testified Harvard professor Elizabeth Warren, who has studied credit and debt issues extensively. “Markets in which customers are bound to terms to which they did not agree, are not free and competitive. Markets in which the terms of an agreement are not revealed until after the customer signs on, are not free and competitive. Markets that permit traps concealed in unreadable jargon, are not free and competitive.”

For their part, Republicans and card issuer representatives insisted that any legislative restrictions would kill the goose that laid the golden card, making credit harder to find and more expensive.

What was notable was the number of representatives who said they personally had fallen into one of those traps.

Three congressmen and one college professor all said they’d been unfairly dinged by a credit card fee.

Rep. Gary Ackerman, a Democrat from Queens, N.Y., shook a two-inch-thick sheaf of credit card offers at the industry officials, saying he was sick of having “card offers up the wazoo.” He took one from the pile and read the convoluted balance transfer offer details. He dared any of the card issuers’ representatives to take the piece of paper, read it, and then explain to him exactly how much interest he would pay on a $1,000 transfer. None took him up on the offer.

It doesn’t bode well for an industry saying it doesn’t need additional oversight to have the overseers personally miffed at you.

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  • DeNeece Butler

    Something I haven’t heard mentioned is the practice of businesses out-sourcing their credit card business to banks. A consumer thinks he has a Sears credit card, only to find that it is actually a Citi-Card. Then, the banks out-source management of their cards to FIA Cardservices, MBNA, etc. Then, as recently happened, BOA bought MBNA, the company that handled Wachovia’s credit card. Suddenly, without my knowledge or permission, I became a BOA customer instead of a Wachovia customer. Now, I have to deal with MBNA who doesn’t know me from Adam’s housecat, instead of the local Wachovia branch where I have been banking for years and am wellll-known.
    It is my sincere hope that after government gets through with the credit card industry, they take on the three credit reporting agencies. Those magic three numbers, our credit rating, that dictates the course of our credit lives as too often based on erroneous information and/or can create an impression that is not true.
    DB

  • Tom Coyne

    Years ago we were offerred “for life” by Capital One an interest rate of 4.99%. I don’t know what there interpretation of life is but mine is for life. Later about 2 years ago the interest charges were all of a sudden raised to 10% with no explanation. We of course immediately challenged it and were told to send a complaint in writing, so we did. No response, so we called and were told our complaint was being reviewed internally and we would be notified of their decision. I told them that the decision was pretty easy to make since we had the original paper work which said “for life”.
    After many phone calls with absolutely no responses and no decisions the time has now passed for 2 years. Capital One refuses to make a decision or respond to the written complaint and we feel they are just hoping we will forget this and accept whatever they want to do.
    We are on SS and this has become a burden, as well it has destroyed our confidence in
    american business and honor. We feel everyone should become aware of these type business practices, especially of Capital One. It’s unfortunate that we cannot afford a lawyer or we would have solved this issue. Thank God for the ability to at least voice our opinion through this media.