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.