According to its Website, the U.S. Consumer Product Safety Commission (CPSC) is “charged with protecting the public from unreasonable risks of serious injury.” When contemplating product safety, most of us probably think of “toys, cribs, power tools, cigarette lighters, and household chemicals,” which are under the purview of this federal regulatory agency. The CPSC does not regulate all consumer products. For instance, cars, trucks and motorcycles are regulated by the Department of Transportation.
As we know, credit card companies are supposedly overseen by the OCC. However, when complaining to the card issuer directly, the response that customers often receive is either condescension, laughter, or an answer that is strikingly similar to our current President’s campaign slogan, “YES WE CAN.” This means that for all intents and purposes, credit card companies are not regulated by anyone.
Thus, cardholders are regularly sent notices about changes that are too astounding to “believe in,” and find that they have no real recourse through any regulatory agency. (I note that according to some stories I have observed, card company representatives seem to have no sense of fear whatsoever when a customer threatens to go to the OCC, and this threat may even invoke laughter — so much for the myth of oversight.)
This does not mean that no recourse whatsoever exists. De-marketing is a very effective tool, even though it may take time. And having no other choice, this has been my strategy in mounting a resistance to a Goliath such as Chase. I would remind any reader that Chase “drew first blood.” Chase finally pushed me way too hard, and crossed a line with its bullying of account holders that I simply refused to accept. I am now fighting for all account holders:
If Chase wants peace, it can issue a press release.
Surrender terms include the demand that Chase must take back its egregious change in terms in its entirety, restoring every account holder to his or her previous condition – even the ones who “agreed at gunpoint” to give up their previously promised promotional rates; I also want an apology for defaming us (this isn’t all; read the linked post for more discussion).
With the above in mind, I find it interesting that according to a recently released report from a PEW Charitable Trust study entitled, “SAFE CREDIT CARD STANDARDS: Policy Recommendations for Protecting Credit Cardholders and Promoting a Functional Marketplace,” 100 percent of the credit cards it reviewed “allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.” The study’s assessment covered general purpose consumer credit cards from the largest 12 issuers (which control more than 88 percent of outstanding credit card debt in America), as of December, 2008.
The purpose of the study (undertaken in partnership with the Sandler Foundation) was to “address growing concerns about abuses in the credit card industry.” Accordingly, since the purpose of the ChangeInTerms.com site is to end the abusive treatment of account holders by credit card companies, I’m glad to see such a noteworthy organization take an interest in these abuses.
Not that the PEW researchers contacted me, but I also feel vindicated in knowing that it too found “the overwhelming majority of credit cardholders are vulnerable to unfair and deceptive practices.” For instance, “in a one-year period between 2007 and 2008, issuers used these powers to raise interest rates on nearly one quarter of cardholder accounts.” These interest rate increases affected “approximately 70 million accounts” and generated “at least $10 billion in additional interest charges” for the banks from customers who were expecting to receive the deal the credit card companies promoted, which was altogether different.
The OCC appears to be impotent, and I expect this may be mostly because of what appears to be a very bank-friendly disposition on the part of Comptroller of the Currency Dugan. He has stated that ”defining, prohibiting, or restricting particular product terms” is a “slippery slope” (see page 8 of the linked statement) that should be avoided. He did go on to recommend opt outs, but “oops,” Chase did not provide one relative to its outrageously abusive change in terms issued in November, 2008 (which has been the subject of much discussion here).
In other words, regardless of an extraordinary range of ever-more egregious acts of abusiveness, let’s allow the banks to continue imposing “we can do as we damn well please terms” on account holders (and be smug about it — operating with impunity as they have been doing).
The new FED rules against “unfair and deceptive” practices do not take affect soon enough (Chase wanted 18 months to comply with the new Regulation Z rules, but it thought its customers should only need 15 days to comply with its new rules). Until then, banks like Chase seem intent on stepping-up the pace of these practices, effectively engaging in legalized loan-sharking, completely unfettered by any meaningful regulation.
Banks’ recent behavior could be likened to a boxing match, when after the bell is rung they’re getting in a few more below-the-belt punches, mercilessly beating consumers (and small business owners). No one seems to be talking about this, but even after the new rules kick in, enforcement will be necessary – it takes both laws and the enforcement of those laws for the rule of law to have any meaning.
In case you are wondering why I started this post with a discussion of the Consumer Product Safety Commission, it is because I have been intrigued with the notion of “product safety” relative to intangible products, like banking services and in particular, credit cards. According to PEW, which made recommendations for a “safe credit card,” one key component is ”an opportunity to opt-out of any proposed change by closing the account and repaying it under the unaltered terms.”
Since Chase’s change in terms does not include an opt out (despite testimony from its executives before Congress, which highlighted opt outs to illustrate the means by which Chase treated customers “fairly”), then we might also conclude that under PEW’s recommended product safety standards, Chase cards would obviously be deemed “unsafe.”
As cardholders who have been defamed, injured, and otherwise “burned” by the Chase-branded product, we already know that using Chase products proved to be dangerous. Therefore, to prevent any further “substantial injury,” I think Chase cards should be subjected to an immediate PRODUCT SAFETY RECALL.
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on Apr 20th, 2009 at 2:45 pm
I just received a notice of an interest rate adjustment on my discover card. Of course the adjustment applied to my outstanding balance, not just new purchases.
The only “opt out” provision is to pay the card off entirely and then it will be closed.
When I call them, as one of their “valued” customers, I will give them the choice: retain my rate and receive a good return on their zero percent fed loan, or jack up my rate and make good in the short term, but lose myself and my wife forever. I am at least going to give “them” some consideration, because I am a “valued” customer.
These card companies are setting themselves up for huge revenue decreases in the future; people will remember.
on Apr 20th, 2009 at 3:01 pm
It sounds like the rush is starting. It appears that the other card companies are going to copy Chase. The no opt out issue, as I have said all along, was the most dangerous aspect of what Chase did. It is true that the card issuers are going to create a “memory” effect, but it’s still going to hurt consumers (and small businesses) now. Thanks for posting this information.
Not to be nit-picky with you, but after going through all of this with Chase, the “opt out” provision you referred to is not an opt out whatsoever. By definition, an opt out allows the customer to reject the new terms, and pay under the old terms (typically this does mean closing the account, such that no new charges are made). If someone at Discover is calling paying the balance in full upon demand an opt out, then he or she is either misinformed, or misleading account holders — a demand payment in full is NOT an opt out.
on Apr 20th, 2009 at 7:46 pm
They are not calling it an opt out. The flyer says they will close the account and you have to pay off the balance as per your cardmember agreement. I am not sure what that meant. I found out my promotional rate for balance transfers goes for another year and half, so I think I am ok. By then the new rules will kick in.
By the way, my friend got a low rate offer from Chase if he obtained a new card. I printed out a “change in terms” member card and had him mail it back in the prepaid envelope!! Wish I were there when they opened it!
on Apr 21st, 2009 at 2:33 pm
Humm, Steve, you have me thinking. It seems like a ChangeInTerms card would be a good return mail item to any credit card company. It’s time that they know we, as customers, have had enough of their one-sided and unfair shenanigans (selling one promise, with every intention to change the deal as soon as the customer is hooked).
on Apr 21st, 2009 at 7:26 pm
Update for those who might be interested. I received my bill that should have shown the rebate of the $10.00 monthly finance charges and corresponding interest. Only the $30.00 was refunded and 90 days of interest on payment #1 remains in the balance, as well as 60 days of interest on payment #2, and 30 days interest on payment #3. So my outstanding balance is still illegally increased by those interest amounts that were folded in.
I am sitting tight until the Thursday meeting with the White House, but if nothing definitive is stated I am going to dispute my entire balance based on an incorrect balance for the new interest calculations. I am also going to press my position that these changes have harmed me in regard to monthly debt/income ratio and use that approach, and the guarantee before Congress that those who are harmed by changes in Chase terms can get the opt out at their original terms.
I of course have no idea how this will pan out and I am completely beside myself at the possibility of further destroying my own credit but I have decided I will not use my 401 (k) and disrupt my future over practices that could well be deemed illegal in a couple of years.
Since I am completely consumed with thoughts of Chase credit cards and the impact these deceptive practices have had on me and everyone who is affected, I may as well use that time filing counter suits to their collection efforts.
on Apr 21st, 2009 at 10:46 pm
Hi Cathy,
I am not able to give legal advice, but I am not comfortable with your outline. It implies further damages to you will be the result, but not to Chase.
I might suggest that you consider sending letters of dispute to the OCC, the NY Attorney General’s Office, and to Chase Executive Offices. You can also include a payment with the written remarks in a cover letter to the effect that:
“I dispute these charges, but as I do not wish to be damaged further by Chase’s inappropriate actions through its attempts to collect interest on top of finance charges that should never have been imposed in the first place, I submit the enclosed sum to be held by Chase until this issue is settled through a legal or regulatory remedy.”
on Apr 21st, 2009 at 11:53 pm
I have sent letters and filed complaints with all that you mentioned and more. The verbiage for the dispute process according to Chase’s procedures is that payment on any disputed amounts constitute forfeiture of your claim. So to claim a dispute and then pay it cancels the dispute and your payment acts as an agreement that your dispute is settled. You also have to file the claim within 60 days that the disputed amount shows on your statement, so I don’t have much time to sort this out.
Yet more gibberish to confuse the consumer and nullify any real dispute or claim.
on Apr 22nd, 2009 at 4:04 pm
Cathy,
See if this link helps (citing 12 C.F.R. 226.13):
http://www.fdic.gov/regulations/laws/rules/6500-1650.html#6500226.13
Try communicating with one or more of the class action firms. Otherwise, I will hope that you achieve your goals. Chase clearly does not want to play fair, given that it wants to charge interest on a finance charge that was inappropriately imposed in the first place — I do think that this issue is conceptually related to the class actions (all of these remarks are just my opinion — not legal advice).
on Apr 22nd, 2009 at 4:25 pm
I realize it’s a gamble I may well lose, but to add insult to injury, they moved my due date up so that two 5% payments are due in the month of April, the payment I made on 4/3/09 was due 4/4/09 and now this disputed bill due 4/30/09. I will not make 2 payments in the same month regardless of the other issues. They must sense my impatience to squeeze me for 2 payments within 26 days and will open themselves to a preference claim as well.
on Jun 3rd, 2009 at 6:36 pm
[...] to me at the time that I composed my article entitled, “PRODUCT SAFETY RECALL: Chase credit cards ‘unsafe,’ pose ‘risks of substantial inj…” (obviously, about a product safety recall for the Chase card), Professor Elizabeth Warren [...]
on Dec 6th, 2009 at 2:26 am
I must have been living blind because I have recently become a Chase victim and until I got online tonight and did some research, I think I thought that it was only people who weren’t paying their bills that were being mistreated by Chase.
Three years ago I got an ad in the mail for a Sony product. I called to order the product. They pushed me to sign up for a “Sony” credit card by offering me a $100 rebate. I didn’t need the card but I signed up for it. It turned out to be a Chase card, but I thought nothing of it. I paid the card off in one month and filed it away. I got monthly mail offerings from Chase that I also threw away. Then I got the “transfer balance” offer that had a 2.9% interest rate for the life of that balance. I took out a $5,000 transfer and stopped using the card but paid 1.5 times the monthly minimum via my other bank’s auto pay. I’ve never missed a payment or been late.
I do a lot of my shopping via Amazon.com. They pushed customers to get an Amazon credit card with both a $30 deduction and faster free delivery. I eventually signed up for the card. The Amazon credit card that I received in the mail was a Chase card.
I bought my home from Washington Mutual(now Chase). I paid off my 30 year loan in 12 years. I used to get mail from them (as Washington Mutual) every week to sign up for a credit card. I eventually signed up for an offer of 0% interest on all purchases for 2 years (which ends in Feb 2009). The credit line was for $10,000. I got as high as using $5,000 on the card but had been paying twice the minimum payment and had stopped using it 6 months ago.
This September I started seeing late charges on my Sony account with the 2.9% rate. Without notice they increased my minimum monthly payment up to 250% of the normal amount due. Because I pay them through autopay I was sure everything was OK. They sent me an automated email notice saying I was deliniquent on the account, I looked on-line at the statement and it showed everything being normal (my rate did not show an increase, my payments were recorded etc.) I just came through a medical operation and had other things on my mind and assumed the email was a mistake. However, within the next month they had assessed me $150.00 in late fees, cut my credit line in half (taking it down to the current balance I had). Now, by my not knowing about the huge increase in my minimum payment, my auto payments weren’t enough to keep my account from going past the limit, even though I haven’t charged anything to the card in more than a year. Therefore, I’ve been charged more late fees.
Because of my now new “bad” record with them (that I unaware of) they used that as an excuse to cut my credit line on the card with the 0% interest on purchases promotion down from $10,000 to $5,000 which is the amount I currently owe). That was the Washington Mutual Bank card that was bought out by Chase this year.
Chase also took my Amazon card, which I not only paid off in full each month via auto pay, but having not used that card for the past 5 months, I had overpaid the card 3 months in a row while I was undergoing recovery from my surgery. Chase sent me an overpayment check for $179 and a letter saying that they had closed the account because of “high” balances on the card.
I am now getting 4-5 automated phone calls every day from them telling me I need to call them “today”. Right now I’m far too angry and upset to try and hold a conversation with them (I called them 3 weeks ago and thought all had been straightened out). At that time they only told me about the account with the late charges (which they refunded to me) and they told me they had just sent me a check to cover the overpayment on the Amazon account. However, they didn’t have the courtesy to tell me that they also closed that account, and that they had cut my credit lines on the two other accounts down to the point where if I had used either card I would have gone over my credit line and would have probably been charged overdraft fees on each purchase.
This is criminal what they are doing!
Chase has maliciously set about to slash my credit lines, ruin my credit, and to change the terms of my account to try and force me into becoming delinquent and to charge me enormous fees. My credit record is 40 years old and I have only had one report of a late payment in all those years (which has long been off my credit reports). When I purchased a new car 8 years ago the auto financial employee told me my FICA score was 798. She said it was the highest score she had seen in the four years she had worked at Chrysler. That was a 30 month loan which I paid off in 6 months.
Yet Chase bank is trying to throw me out of their bank while at the same time they are running ads on TV and on the internet trying to get new customers. I just don’t understand. Due to hospital bills and the fact that my house taxes and auto insurance is due in December, this is a bad time for me to be dealing with Chase’s tricks. I have over $100,000 in credit cards lines that have a Zero balance, I’m not beholden to Chase.
I’ll talk to them on Monday, I’m willing to payer higher minimum monthly fees but nothing else. They are banking on hitting me with a high interest rate come February on that 0% account. I’ll let them know that a week before the money is due I’ll walk into their bank and pay it all off. I’ll pay them off every account and close my checking account that they inherited from Washington Mutual so that they won’t ever make a penny from me again.
They suck so bad!
on Dec 17th, 2009 at 8:31 am
I also have been gouged by Chase. I was offered a promotional fee of 3.99% three yrs. ago. Took their offer for $20,000. Have made regular payments much larger then the minimum all this time. Recently a payment was lost in the mail (or more likely shredded by Chase). They charged me a $39 fee and raised my promotional fee to prime + 5.99%. I am scrambling to find another way to pay off my $7500 balance as they will not get another penny from me.