Next, credit card companies may decide that you went to a drug store, bought a prescription and are therefore associated with a supposed “increased risk” — must be sick; great time to raise interest rates or fees, and “kick ‘em while they’re down.”

I first introduced Kevin Johnson to visitors on this site as an entrepreneur who “was an obvious kindred spirit in fighting credit card company abuses.”  That was a bit of an understatement.

On March 11, 2009, Kevin flew at at his own expense to testify in a Maryland hearing in connection with proposed bill against the practice of ”blacklisting” by credit card companies, in particular, American Express.  Kevin also took the time to visit other trade and regulatory organizations in Washington, D.C., to discuss increasing regulation for credit card companies.

Having had the opportunity to testify before Congress (and in Tennessee, before the Senate Environment, Conservation and Tourism Committee) myself, I can relate that it is an interesting experience.  Relative to my appearance on Capital Hill, I had little time to prepare my testimony, and I worked late into the night before the hearing, preparing the written remarks and then making copies at a 24-hour copy shop; there are really two parts to this, as one’s allotted time to speak is limited, but additional information and exhibits can be entered into the record. 

Navigating Washington from the point of view of getting around is not too difficult, as it has a great transportation system.  I would also remark that it is one of the most extraordinary places I have ever visited relative to pedestrian behavior.  As a visitor, I have noticed that on occasions when I was pondering a map, Washingtonians would typically come up to me and offer help.  In other cities, a visitor is often on his or her own.

So what is “blacklisting”?  To answer this, I’ll begin with an excerpt from Kevin’s testimony, detailing how it came to his attention in connection with an American Express account:

In October of last year, I received a letter from American Express informing me of a credit line reduction of $7,000, almost 65%. When I read the following reason given, in part, for the reduction, I was appalled.  The letter read: “Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.”  No where in my contract or terms with American Express was it disclosed that the delinquent actions of others would have a direct bearing on my credit worthiness.  Had I known this was the case, I certainly would have patronized another more ethical business. 

In other words, blacklisting is a practice whereby credit card companies profile card holders (using data-mining techniques), and categorize them by virtue of their purchases.  To me, this is reminiscent of some science fiction movies (coming to a reality near you), that depict one’s every move being tracked.  Factors such as where you shopped, and the company that holds your mortgage are used by credit card companies to make decisions about your credit (and in Kevin’s case, obviously, American Express took an adverse action against him, although he had done nothing wrong).

Even though the excerpt above refers to where one may have shopped, I am familiar with data-mining to the extent that I can point out an example of other intrusive (and discriminatory) techniques that could easily be associated with this.  Have you ever gone to a grocery store with a cartload of items, and upon checking out received a coupon for your next purchase?  When our children were younger, and my wife and I were buying diapers, our coupons were often for related “baby items,” such as formula.  The technology that allows for this is associated with data-mining.  Algorithms predict what one is likely to buy next, based upon what has been purchased already.

Next, credit card companies may decide that you went to a drug store, bought a prescription and are therefore associated with a supposed “increased risk” — must be sick; great time to raise interest rates or fees, and ”kick ‘em while they’re down.”

Maryland State Representative Saqib Ali introduced House Bill 1292 Consumer Protection – Blacklist Prevention,” to stop this practice in that state, and it is hoped that it will serve as a model for other states that may follow.  I applaud Kevin (and the Honorable Saqib Ali and colleagues with the Maryland House of Representatives, Economic Matters Committee) for fighting yet one more form of abusiveness on the part credit card companies.